The World Development Report 2024 by the World Bank, released on August 1, highlights the challenges India and other middle-income countries face in avoiding the ‘middle-income trap.’ This trap occurs when economies grow to a certain level but then struggle to advance further, preventing them from reaching high-income status.
Key Findings
The report projects that at the current growth pace, China might take 10 years, Indonesia 70 years, and India up to 75 years to reach just a quarter of the per capita income of the United States. The report identifies 108 middle-income countries, including India, that are at risk of falling into this trap.
Recommendations for India
The World Bank suggests a “3 i” strategy—investments, infusion of technology, and innovation—to help countries avoid the middle-income trap. Lower-income countries should start with investments, while lower-middle-income countries should also infuse technology. Upper-middle-income countries, like India, need to focus on all three areas.
For India, which had a per capita income of $2,390 in 2022, the report advises focusing on both investments and technological infusion. However, to truly advance, India must also prioritize innovation and research, leveraging its demographic advantage and existing human capital.
Addressing Inequality
The report underscores the importance of addressing socio-economic inequalities in India. For India to achieve its goal of becoming a developed nation by 2047, it must ensure that growth is inclusive and benefits all segments of society.
Final Thoughts
While some Western reports are criticized for perpetuating the West’s superiority, India should not be discouraged. By applying the “3 i” strategy, India can enhance opportunities for its citizens, improve living standards, and build its human resource capabilities.