The International Political Economy of the Middle-income Trap

Abstract

Developing countries face uncertain trajectories for growth in the twenty-first century, with many finding themselves a ‘middle-income trap’. Extant theories in the politics of development that focus on domestic institutional strength and weakness represent necessary but not fully sufficient explanations for the trajectories of middle-income countries. In order to explain uncertain and uneven development outcomes in an era of heightened globalisation, this article seeks to explore the impact of international institutions, specifically the post-Cold War structures of trade and investment and global value chains, on the possibilities for growth for middle-income countries. The particular character of rules and norms defining trade and investment and the power dynamics behind their design suggest that international institutions as well as domestic factors explain disappointing and increasingly unequal development outcomes among middle-income countries.

Keywords:

• Foreign direct investment
• economic growth
• developing
• institutions
• industrial development
• state

Disclosure statement

No potential conflict of interest was reported by the author(s).

Acknowledgements

For their comments, advice and criticisms, I would like to thank Amit Ahuja, Caroline Arnold, Catherine Boone, Jennifer Brass, Jonathan Chow, David Collier, Peter Kingstone, James Kurth, Jody LaPorte, Darius Ornston, Natalya Naqvi, Jessica Rich, Herman Schwartz, Paul Segal, Pon Souvannaseng, Paul Staniland, Andrew Sumner, two anonymous reviewers and the editors of JDS. Earlier versions of this paper were presented in seminars at King’s College London, Oxford University, and at the American Political Science Association and the Society for the Advancement of Socio-Economics annual meetings.

Notes

1 Taiwan’s GNI per capita is not calculated by the World Bank, but its GDP per capita at 1990 was $8216, thus roughly at the high-income threshold.