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Media type:
E-Article
Title:
Middle‐income country trap and total factor productivity growth
Contributor:
Lee, Young Hoon;
Park, Jungsoo
imprint:
Wiley, 2024
Published in:Pacific Economic Review
Language:
English
DOI:
10.1111/1468-0106.12439
ISSN:
1361-374X;
1468-0106
Origination:
Footnote:
Description:
<jats:title>Abstract</jats:title><jats:p>This study assessed the factors allowing middle‐income countries to achieve higher income levels and thus escape the middle‐income trap (MIT). By deriving a stochastic production function using the Cornwell–Schmidt–Sickles (CSS) estimator and country panel data, we successfully distinguished between growth due to total factor productivity (TFP) and that attributable to various production inputs after controlling for random shocks and cross‐sectional dependence. We found that TFP growth was the main factor distinguishing middle‐income countries that have and have not escaped from the MIT; the former countries had significantly higher TFP growth.</jats:p>