DO COUNTRIES often get trapped betwixt poverty and prosperity? The concept of a middle-income trap was popular long before it was thoroughly tested, or even very clearly defined. The debate has thus benefited a lot from an inquiry into middle-income slowdowns by Barry Eichengreen, Donghyun Park and Kwanho Shin (EPS). Their 2013 paper is here. The authors define their terms precisely and test them rigorously. They trawled through the historical record, looking for fast-growing economies (enjoying average per-capita growth of at least 3.5% over seven years, to be precise) that suffered steep slowdowns (of at least 2 percentage points in average growth over the next seven years).
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