Middle Income Trap

The inability of an economy to reach a higher level of income per capita after reaching a certain level of income, and being stuck where it is, is defined as a middle income trap in the economic literature. This concept was first discussed in 2007 in the study titled “East Asia's Renaissance: Ideas for Economic Growth” (An East Asian Renaissance Ideas for Economic Growth), a report of the World Bank. In this report, it has been stated that countries reaching the middle income level cannot compete with countries in the low income group in terms of wages, exhibit low growth performance as a result of insufficient innovation against countries in the high income group, and are caught in the middle income trap. An important aspect of the middle income trap is that the Gross Domestic Product (GDP) per capita in a country is on a bumpy course instead of reaching a high income level.

 As is generally accepted, the classification of the World Bank is taken into account in determining the income level of countries. according to the relevant classification according to the data of 2015, countries with per capita income below $1,025 are defined as low-income countries, countries with Deciency between $1,026-$4,035 lower middle income, countries with Deciency between $4,036- $12,475 upper middle income and countries with deciency between $12,476 and above are defined as high income countries (Alkan and Umit, 2018).

• Savings and investments remain at a low level,
• Development in the manufacturing industry is slowing down
• The variety of products in the industry remains limited.