Revisiting the Middle-Income Trap: Updated Transition Benchmarks and Country Classifications

Abstract

The concept of the middle-income trap (MIT) is widely used to explain why many countries experience prolonged stagnation after reaching middle-income levels. Existing empirical studies, however, rely on transition benchmarks derived from earlier reference periods and may not fully reflect recent development experiences. This paper revisits the middle-income trap framework by updating income transition benchmarks using long-run per capita income data from the Maddison Project Database extended to 2022.

Following the methodology proposed by Felipe et al., fixed income level thresholds are retained while transition-period benchmarks are recalculated based on the observed experiences of countries that successfully completed income transitions after 1950. The results indicate that the median time required to transition from lower-middle-income to upper-middle-income has increased from 28 years to 35 years, while the median duration for transitions from upper-middle-income to high-income remains at 14 years. These findings suggest that income mobility has slowed at the lower-middle-income stage in recent decades, whereas upper-middle-income transitions have remained relatively stable.

Using the updated benchmarks, countries are classified into lower-middle-income trap, upper-middle-income trap, non-trapped middle-income, successful transition, macro-unstable, and persistently low-income categories. The analysis highlights the reference-year dependence of MIT benchmarks and shows that the middle-income trap should be understood as a moving benchmark rather than a fixed structural barrier. The updated classification provides a revised empirical basis for assessing development challenges faced by middle-income economies in the contemporary global context.