Ben Ross Schneider’s Conclusion

The conclusion is that escaping middle income trap is not just a question of incremental adjustments. The middle income trap countries need big leap in institutional capacity. It requires convergence in interests and broad collations according to Ben Ross Schneider.

The theory is for instance path dependent and prior trajectories of growth shape and constrain contemporary potions. FDI, informality are two examples of this.

There are also contra institutional hegemony in development studies. Countries need to look at trajectories and social coalitions to understand possibilities for institution building.

The tasks for development in a middle income country has been numerous. Two examples are the Cold war, and globalization.

Possible solutions for the middle income trap:

Top-down – A theory which is sometimes described as a synonym for decomposition. Someone are breaking down the system to gain insight into its compositional sub-systems. A top down approach begin with the large picture and breaks down the large picture into smaller segments or components. The term top-down do not mean the same thing when we speak about decision-making in management and organizational arenas. In management and organizational arenas top-down means the decisions are formal decisions and they are made by a management team in a company or they are formed from the government to the people.

Bottom-up – is more of a social democratic idea of decision-making in a management or organizational arena. A bottom-up system is based on the grassroots and a larger number of people work together in a particular situation. Modernizing a society which urbanizing follows and the agriculture becomes less essential because the agriculture needs fewer people thanks to machines.

Discussion:

Critic: GDP - One problem with the study of the middle income trap is the GDP. It is not very accurate to use GDP to compare the economic situation for citizens in different countries. Why are the group not using HDI (human development index) instead? There are countries which have high GDP but very low HDI because the spend not enough money on welfare, education etcetera.

 GDP do not answer how it is with: Corruption in a country, crime situation in a country, the security spending and the military spending,

Equality: The statements in the equality section are interesting and correct. The lecturer did not specify what variables was used to compare equality in the countries. They have so specify if it is about gender equality, economic equality and a diversity issue. I know that the lecture was not very interested in this issue.

Higher education: It is difficult to guarantee that higher education will generate higher income in a country. It is difficult to draw conclusions about that when there are individuals who need to go through the system.

There are however evidence which proves the correlation between higher income and higher education. A high quality Education system is an important investment for a middle income country if the system supports breakthroughs in technology and science by encouraging creativity.

However there are other variables who affect a countries possibility to gain economic growth. I think it can be problematic to compare all the middle income countries with the US. It creates an illusion that the united states are the leading role when it comes to economic growth. The Unites states has a positive progress according to GDP but the figures are not as convincing/impressive in human development index. The study would have been more accurate and less hypothetical if the scientist used human development index instead of GDP.

“There is as well an absence of threat and incentives for complacency.” Why is absence of threat and incentives of complacency a problem? Absence of threat and incentives of complacency is supposed to make a country less vulnerable to threats and unpredictable aspects. This should lead to the fact that a country has more time to solve new problems and this can make people lazy or at least less active to fight for change because of the complexity of the middle income trap. There is no evidence for this in my perspective.

Comparison with the US

The countries which was included when Ben Ross Schneider spoke about the middle income trap was/are compared to the US. The majority of the scientist in the project are from the US and the Emory University is in the US and that might be the reason why the united states are the main country in the comparisons. There is a problem with comparisons with the United States because it is difficult to draw conclusions about general factors when United States has a complex then again a specific economy.

Conclusion:

The study is very specific and interesting because there is clear evidence for a stagnation in countries which has growth into middle income countries. There are variables that need to take in the consideration such as HDI and another measurement of equality. The study would have been more accurate and less hypothetical if the scientist used human development index instead of GDP. However there was interesting arguments concerning equality and economic growth but then again more are variables need to be specified. I want know what state of equality is admirable, because the question is not answered. Equality is an essential part for economic growth in a country and therefor the issue about ultimate objective needs an explanation and an answer.

The comparison with the United States leaves very much to offer and it is difficult to make a general conclusion regarding the middle income trap because of that decision.

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