More than 100 countries — including China, India, Brazil, and South Africa — face significant obstacles that could hinder their efforts to transition to high-income status in the coming decades, according to a new World Bank study that provides the first comprehensive roadmap to help developing countries escape the so-called “middle-income trap.”
Drawing on lessons from the past 50 years, the World Development Report 2024 notes that as countries become wealthier, economic growth rates slow or stall when per capita income reaches approximately 10 percent of the U.S. per capita GDP — equivalent to about $8,000 today. At this point, countries enter the trap of “stalled” economic growth.
This figure sits in the middle of the World Bank’s classification of middle-income countries. Since 1990, only 34 middle-income economies have successfully transitioned to high-income status — more than one-third of which benefited from joining the European Union or from recently discovered oil reserves.
By the end of 2023, 108 countries were classified as middle-income, with per capita GDP ranging between $1,136 and $13,845. These countries collectively host 6 billion people — roughly 75 percent of the global population — with two-thirds living in extreme poverty. They also produce over 40 percent of global GDP and account for more than 60 percent of carbon emissions.
The World Bank highlighted that these countries face far greater challenges than their predecessors in escaping the middle-income trap, including rapid population aging, rising protectionism in advanced economies, and the urgent need to accelerate energy transitions.
Commenting on the findings, Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics, said:
“Middle-income countries will be the battleground for winning or losing the fight for global economic prosperity. Yet many of these countries rely on outdated strategies to catch up with advanced economies, focusing solely on long-term investment or moving toward innovation without adequate preparation. It is therefore essential to adopt a new approach: first focusing on investment, then leveraging new technologies from abroad, and finally implementing a three-pronged strategy that balances investment, technology, and innovation. With increasing demographic, ecological, and geopolitical pressures, there is no room for error.”
