Inclusive Development: Escaping the Middle-Income Trap

Abstract

Latin America is once again facing familiar challenges: How to sustain high growth rates when the global economy has decelerated and commodity prices have fallen, and at the same time prioritize social inclusion as a requisite for long-term sustainability of the development process. If these goals are not achieved, Latin America runs the risk of falling into the so-called middle-income trap. It is a fact that by late 2012, 20 countries already had crossed the threshold—US$10,000 per capita measured in PPP (purchasing power parity)—into the ranks of middle-income nations. In four of them (Antigua and Barbuda, Argentina, Chile, and Trinidad and Tobago), the figure was close to US$20,000. Another 11 economies struggling to join the club range from Haiti to countries like Jamaica and the Dominican Republic, which will have crossed the US$10,000 threshold by 2015.