🌐ENGLISH

Senior Researcher, DEPOCEN
Visiting associate professor, Graduate School of Economics and Management, Tohoku University

Lecture, International University, VNU-HCM
Lecture, Vietnam National University Ho Chi Minh City

Why do some economies manage to escape the middle-income trap while others remain trapped? To answer this question, we develop an overlapping-generations model in which economies can choose between a primitive technology subject to diminishing returns and an advanced technology capable of sustaining long-run growth. Adoption becomes viable only when human capital, capital-use efficiency, and demographic conditions are sufficiently favorable; otherwise, the economy may converge to a middle-income steady state from which escape is nearly impossible. We test these predictions using panel data for 185 economies over 1950--2023. The results show that higher human capital and stronger institutional quality are robustly associated with a greater likelihood of escape, whereas aging becomes an obstacle primarily for economies that grow old before achieving high-income status. Additional evidence based on economic complexity and imports of manufactures and machinery supports the model's central technology-adoption mechanism which determines whether an economy successfully completes the transition out of middle-income status.(JEL Classification: E13, O11, O33, O41, O47)