Drawing on the development experience and advances in economic analysis since the 1950s, World Development Report 2024 identifies what developing economies can do to avoid the “middle-income trap.” Lower-middle-income countries must go beyond investment-driven strategies—they must also adopt modern technologies and successful business practices from abroad and infuse them across their economies. Upper-middle-income countries need to accelerate the shift to innovation, by pushing the global frontiers of technology. This requires reconfiguring economic structures governing enterprises, labor, and energy use—in ways that enable greater economic freedom, social mobility, and political contestability.
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Middle-income countries—home today to 6 billion people—are in a race against time.
Many have set ambitious deadlines for themselves: reach high-income status within the next two or three decades. That will not be easy. Since the 1990s, only 34 middle-income economies have succeeded in that feat. The rest—108 at the end of 2023—have been stuck in “the middle-income trap. Since 1970, the median income per capita of middle-income countries has never risen above 10 percent of the US level.
Climbing to high-income status in today’s environment will be harder still—because of high debt and aging populations in developing countries and growing protectionism in advanced economies. World Development Report 2024 outlines how all developing economies can avoid the middle-income trap.
The “3i strategy”
Depending on their stage of development, countries need to adopt a sequenced mand progressively more sophisticated mix of policies:
