World Bank warns that 6 billion people are “trapped” in middle income

Q24N (EFE) Approximately 6 billion people are “trapped” in middle-income countries, but it is key that they reach a significant level of income before transitioning to aging, which increases social security expenses for countries, said a representative of the World Bank in Lima, Peru on Thursday.

Economic growth in middle-income countries is “slower,” it is a different growth and “climate change makes us more complicated, in terms of technological requirements,” said the general director of the World Bank’s Global Practice on Poverty and Equity, Luis Felipe López Calva, at the high-level seminar of the Economic Commission for Latin America and the Caribbean (ECLAC).

Addressing the debate on “The development traps of Latin America and the Caribbean and the indispensable transformations,” López Calva added that some of the steps to get out of the middle-income trap are investment in infrastructure and digitalization.

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“Investing in everything that increases the profitability of private investment,” noted the WB director.

In López Calva’s opinion, it is necessary to change from a growth model based on accumulation to one based on innovation, because otherwise «we remain trapped in the transition.»

For low-income countries, «we insist on greater investment, to then adopt technology,» he said.

The director mentioned the success stories, in «getting out of the trap,» such as those of Uruguay, Paraguay and Chile, as well as some Caribbean economies, based on natural resources.

In the case of Chile, he recalled that in 1990, Mexico’s per capita income was 50% higher than its own, and that today Mexico’s per capita income is 40% lower than Chile’s.

However, he indicated that taking into account an average poverty of 6.85 dollars per day in upper-middle-income countries, 44% of the global population is poor.

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“Very little progress has been made” in getting out of this economic growth, but it is a necessary condition to get out of this trap, he said.

On the second day of the fortieth session of ECLAC, the delegates gathered in Lima participated in three discussion panels on different topics on the development traps, sustainable growth and social inequality.

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