Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, speaking during a panel discussion at the launch of the World Bank’s 2024 World Development Report, highlighted the daunting challenge Ghana faces in breaking free from the middle-income trap.
According to Professor Quartey, Ghana became a middle-income country in 2010, with a capital base of $1,337. By 2023, this figure had grown to around $2,365. However, to achieve upper middle-income status, the country would need to reach $4,560, a process that at the current pace could take 26 years.
During a panel discussion on the report, Professor Quartey emphasized that Ghana’s economic transformation requires targeted intervention, especially in supporting the middle sectors of the economy.
He argued that beyond credit provisions, there must be a focus on processing, service sector development, and value accumulation, urging for coordinated efforts between the government and private sector to drive this change.
The World Development Report underscores a broader concern for the 108 middle-income countries (MICs) globally, many of which are struggling to escape the middle-income trap.
According to the report, these countries must transition through three critical stages to achieve high-income status. The first, referred to as “1i,” focuses on investment.
The second, “2i,” adds the integration and dissemination of foreign technologies. Finally, the “3i” stage introduces innovation into the growth model.
South Korea is cited as a success story. With a per capita income of just $1,200 in 1960, the country embarked on a strategy of heavy investment and industrial policy in the 1970s, focused on adopting foreign technologies.
By the end of 2023, South Korea’s per capita income had surged to $33,000, illustrating the power of this phased approach.
For most middle-income countries, progress has been far less encouraging. While many have moved out of low-income status since the 1990s, only 34 out of 108 have transitioned to high-income economies over the past three decades.
The challenge for these nations lies not only in maintaining growth but also in accelerating it, requiring a delicate balance of investment, technology, and innovation to avoid becoming permanently stalled in the middle-income bracket.
Source:norvanreports.com