Washington:   A new World Bank study indicates that India, alongside other major emerging economies like China, Brazil, and South Africa, faces considerable challenges in becoming a high-income country in the near future. The World Development Report 2024: The Middle Income Trap suggests that India could need up to 75 years to reach one-quarter of the US per capita income.

The report highlights a common obstacle for nations growing wealthier: they often encounter a “trap” when their per capita income hits about 10% of the US GDP per person—equivalent to $8,000 today. At the end of 2023, 108 countries were classified as middle-income, representing 75% of the global population and two-thirds of those in extreme poverty. These countries contribute over 40% of global GDP and account for more than 60% of carbon emissions.

The study notes that overcoming this trap is increasingly difficult due to aging populations, rising protectionism, and the pressing need for energy transition. Indermit Gill, Chief Economist of the World Bank Group, points out that many middle-income countries, including India, are still using outdated strategies focused primarily on investment, without incorporating new technologies or innovation.

The report suggests a “3i strategy” for advancing to high-income status: start with investment, then incorporate foreign technologies, and finally focus on innovation. India is encouraged to adopt this staged approach to move beyond its current middle-income status.

Somik V. Lall, Director of the 2024 World Development Report, acknowledges the difficulties ahead but emphasizes that progress is possible. He cites South Korea as a successful example, having transformed from a low-income country in 1960 to a high-income one by 2023, through a phased strategy of investment, technology adoption, and innovation. India, and other middle-income nations, are urged to follow a similar path to escape the middle-income trap and achieve sustainable growth.