The Political Economy of the Middle Income Trap

Session Submission Type: Panel

Abstract

Latin America’s promising economic growth during the 2000s obfuscated the reality that most countries in the region are caught in the middle income trap. Under Washington Consensus policies, productivity growth has been low (the second lowest among developing areas, only ahead of MENA countries), economies have seen premature de-industrialization, and innovation activities have been limited as policy support has been weak and disarticulated.
While analysts of the middle income trap differ in their characterization of the trap, they generally agree that the challenge for middle income countries is to move from factor-based growth to innovation-based growth. In other words, the move to a high-income economy involves the internalization of innovation-based activities on a significant scale.
The presentations on this panel explore whether and how Latin American countries can escape from the middle income trap, analyzing the impact of the inter-relations between innovation inputs, government policies, and political constellations on innovation outcomes and structural transformation. The presentations explore the connection between production structure, innovation, and government policies (Paus), the relations between innovation outcomes and patterns of organization and political mobilization in national science, technology, and innovation communities (Shadlen), differences in science and technology strategies between Latin America and East Asia as determinants of different competitiveness outcomes in the two regions (Lee), the institutional challenges for innovation advancement and political capacity for such institution building in Latin America (Schneider), and the opportunities Latin American governments missed in the 2000s and the policies they need to pursue now in order to avoid a low-level long-term growth plateau (Perez Caldentey)

Sub Track

• Economics and Social Policies

Chair

• Eva A Paus, Mount Holyoke College

Individual Presentations

• The Middle Income Trap: Production Structure, Innovation, and Government Policies - Eva A Paus, Mount Holyoke College

• The Political Economy of Science, Technology and Innovation Policy in Contemporary Latin America - Kenneth C Shadlen, London School of Economics and Political Science

• The Source of the Middle Income Trap: Different National Innovation Systems in East Asia and Latin America - Keun Lee, Seoul National University

• The Middle-Income Trap: More Politics than Economics - Ben Ross Schneider, Massachusetts Institute of Technology

• Latin America’s Current Slowdown and the Middle Income Trap - Esteban R Pérez Caldentey, CEPAL. United Nations