Abstract
The “middle-income trap” continues to fascinate scholars and policy-makers in Southeast Asia. Generally, it refers to a situation where countries are “trapped” at the middle-income level, facing difficulties in developing into high-income economies. Thus far, the usual suspects for the middle-income trap–identified from endogenous growth models–include the lack of human capital and technological innovation. The policy prescriptions are usually mundane–improve the quality of human capital and increase research and development (R&D) expenditures. Somehow, one feels that such policy recommendations are too generic. Despite this knowledge about the drivers of economic growth, why is the middle-income trap still a real and great concern in many middle-income countries? Could it be that there are other factors crucial for countries to graduate into high-income levels?
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