New Strategies Essential for Caribbean’s Economic Growth to Escape the Middle-Income Trap, Says World Bank Report
BRIDGETOWN, Barbados — A poignant report from the World Bank reveals an urgent economic challenge facing middle-income countries globally, prominently including those in the Caribbean. Titled "The Middle-Income Trap," the World Development Report 2024 outlines that since the 1990s, only 34 out of 108 middle-income nations have successfully transitioned to high-income status by the close of 2023. Among these nations are five Caribbean countries: Antigua and Barbuda, Barbados, Guyana, St Kitts-Nevis, and Trinidad and Tobago.
The report offers the first comprehensive roadmap for these nations to overcome the so-called "middle-income trap," a plateau reached at about 10% of the United States GDP per person, equivalent to approximately US$8,000 annually. This level typifies the core challenge where middle-income countries find themselves stuck, unable to achieve high-income status.
Middle-income countries today face increased pressures compared to their historical counterparts, with rapidly aging populations, rising global protectionism, and urgent demands for energy transformation. In the Caribbean, these issues are further heightened by susceptibility to climate change and economic shocks, adding layers of complexity to the quest for economic advancement.
"The battle for global economic prosperity will largely be won or lost in middle-income countries,” emphasized Indermit Gill, chief economist of the World Bank Group. He highlighted a reliance on outdated economic strategies, where nations depend too long on investment before incompletely switching to innovation as a primary development driver. Gill proposes a novel and layered ‘3i strategy’ urging countries to balance investment, technological infusion from abroad, and, finally, indigenous innovation.
This approach suggests that low-income nations concentrate initially on investment policies (1i phase). As they progress to lower-middle-income status, they should prioritize both investments and external technology adoption (2i phase). Ultimately, at the upper-middle-income stage, countries should engage fully with innovation by pushing technological boundaries (3i phase).
Lilia Burunciuc, World Bank Director for the Caribbean, expressed optimism about the region’s potential to progress economically, although recognizing the need for significant reform and knowledge transfer from successfully transitioned peers, both within and beyond the Caribbean.
Complementing this economic focus, the United Nations Development Programme (UNDP) 2024 Global Multidimensional Poverty Index (MPI) sheds light on the intricate links between violent conflict and poverty. According to the Uppsala Conflict Data Programme, conflict-stricken regions experience intensified poverty levels, illustrating a marked need for nuanced strategies to tackle poverty in these contexts.
The MPI’s latest data from 112 countries indicates that 1.1 billion people endure intense multidimensional poverty, with half being children, highlighting urgent attention towards conflict-affected areas where poverty is most pervasive. This multidimensional approach stresses the importance of holistic strategies to eradicate global poverty fully, particularly in volatile settings.
As the world moves towards 2024, the challenges elucidated in these reports underscore the imperative for innovative, adaptable, and collaborative strategies, particularly for Caribbean nations aiming to vault into high-income status while confronting the complex realities of their economic, demographic, and environmental landscapes.
