Asia successful in fending off "middle-income trap"

Notably Japan and the four Asian tigers.

There is no clear and accepted definition of what the middle-income trap is, but it can be broadly described as the phenomenon of economies stagnating at middle-income levels and failing to rise to the high-income levels of advanced economies.

According to a research report from Nomura, in line with this, since the Second World War, Asia has thus far been relatively successful in escaping the middle-income trap, with Japan and the four Asian tigers – Hong Kong, Singapore, Korea and Taiwan – all graduating to the high-income country group (>$13,000) in less than 30 years.

On Nomura's income measure and using the threshold of 42 years used by Jesus Felipe at the Asia Development Bank, Argentina, Uruguay and Chile have recently graduated from the middle-income group, but it took these countries over half a century to do so.

Here's more from Nomura:

Malaysia, on the other hand, just graduated last year, after 42 years, becoming the first Southeast Asian country after Singapore to join the ranks of a high-income country, and just escaping being labelled a middle-income-trap country, on our definition.

This gels with our own positive economic outlook on Malaysia, reflecting good progress in the government’s 2010-20 Economic Transformation Program in buoying private investment, using a pre-emptive monetary policy and with a goods and services tax (GST) of 6% due to be introduced in April 2015, to further strengthen fiscal finances.