Abstract:

The growth performances of countries demonstrate that very few countries reach the higher income group from middle income, in terms of per capita income. The rigidity of the transition between income groups has led to the debate of the middle-income trap (MIT) concept gaining importance. The main goal of current study is to analyze the existence of MIT for the Fragile Five countries (Brazil, India, Indonesia, South Africa, Turkey) and provide some policy recommendations for moving away from MIT. In the current study, two different test procedures, consisting of the income convergence test procedure, and the panel data analysis applied to determine the factors affecting the economic growth of the countries examined, were applied. The income convergence test reveals the only country in MIT is Brazil. On the other hand the results demonstrate a positive and statistically significant relationship between the GDPPC and tertiary school enrollment, real effective exchange rate, gross capital investments, industry value added, agriculture value added and terms of trade and for the Fragile Five. Therefore, policies that support these variables are important to move away from MIT.

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