Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014

The Middle-income Trap Debate:
Taking Stock, Looking Ahead1

Veerayooth Kanchoochat
National Graduate Institute for Policy Studies (GRIPS, Tokyo)

1

I am grateful to Keiichi Tsunekawa and Yonosuke Hara for their feedback on earlier drafts. Research for thisessay is supported by the Emerging State Project (Comparative History Approach: Shiraishi Group) under theGrans-in-Aid research project No. 25101004 of the Japan Society for Promotion of Sciences.

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014

Contents

Introduction ..................................................................................................................... 3
I. One Term, Two Definitions, and Three Solutions ....................................................... 3
1.1 Getting education and institutions right............................................................................................. 5
1.2 Changing export composition by following comparative advantage .................................................. 5
1.3 Changing export composition by defying comparative advantage...................................................... 6

II. Lessons from East Asian Catching up ........................................................................ 7
2.1 Education and institutions need to link with industrial targets............................................................ 8
2.2 Changing export composition against comparative advantage ........................................................... 9
2.3 Industrial and technology policies with yardstick and exit strategy .................................................. 11

III. Looking Ahead: Criteria for Targeting .................................................................. 14
References ...................................................................................................................... 16

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014

Introduction
The term “middle-income trap” (henceforth MIT) is a relatively new phrase invented by
Gill and Kharas (2007) in their East Asian Renaissance report. It has since become apowerful buzzword in the international development community. Whether or not a country
is in the “middle-income” level depends on the definition provided by the World Bank. 2
But the debate over the “trap” is another matter. Despite using the same phrase, the MIT
literature varies considerably in the definitions provided, cases studied, underlying causesof the trap analyzed, and policies suggested. The objective of this paper is twofold. First, it
attempts at classifying this burgeoning area of research. Based on its theoretical and policy
differences, the existing MIT literature can be categorized into three groups: that is, (1)getting education and institutions right; (2) changing export composition by following
comparative advantage; and (3) changing export composition by defying comparativeadvantage. Second, it examines the validity of these three groups through catching-up
experience of selected newly industrializing economies (NIEs) in East Asia. Conceptual
grounds for future policymaking and potential research agenda are discussed in the
concluding section.

I. One Term, Two Definitions, and Three Solutions
Generally, the term MIT refers to the situation in which countries, despite attaining middleincome status for certain periods, have, or seem to have, failed to grow further into highincome level. However, there is no accepted definition of what the MIT is. One group of2

According to the country’s GNI per capita in 2012, countries have been classified as follows: low income,$1,035 or less; lower middle income, $1,036–$4,085; upper middle income, $4,086–$12,615; and highincome, $12,616 or more. Note that the Bank’s measures and categories have been adjusted time and again.

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
literature sees the trap as “growth slowdowns”, for example, Eichengreen et al. (2013)
define MIT countries as those who had undergone average GDP growth of at least 3.5% forseveral years, and then stepped down by at least 2% between successive seven-year periods(in the same vein are Felipe et al. 2012; Aiyae et al. 2013). Another group puts the MIT
into the broader debate over economic “catching up” of developing countries in relation tosuch developed countries as the US or Japan (e.g. Lin and Rosenblatt 2012; Lee 2013).
The literature is even more divergent when it comes to the analysis of, and the solution
to, the trap, which can be classified into three groups: that is, (1) getting education andinstitutions right; (2) changing export composition by following comparative advantage;and (3) changing export composition by defying comparative advantage. Table 1
summarizes their differences in the major causes of the MIT analyzed, the role the stateshould play, and some exemplary works in each body.
Table 1. A summary of three bodies of MIT literature
Major causes of MIT

The role the stateshould play

Exemplary works(1) Getting education andinstitutions right.

Inadequate quality ofeducation andinstitutions.

Minimum. To make theright incentive systems;
investing more ineducation andinstitutions.

Jimenez et al. (2012)
Jitsuchon (2012)
Tran (2013)
Aiyar et al. (2013)(2) Changing export
composition byfollowing comparativeadvantage.

Inadequate capabilities to
produce and export
higher-technology
products.

Facilitating. To support
industries in which a
country possesses
comparative advantage.

Felipe et al. (2012)
Eichengreen et al. (2013)
Lin and Treichel (2012)(3) Changing export
composition bydefying comparativeadvantage.

Inappropriate andinsufficient role of thestate in enhancing
capabilities to produce
and export highertechnology products.

Proactive. To focus oncapability accumulationand deliberate attention
to advancing industrial
upgrading.

Ohno (2009); Paus (2012);
Prime (2012); Caldentey(2012); Sánchez-Ancochea(2012); Abugattas-Majluf(2012); Lee (2013)

Notes:(1) The review here is limited only to those that explicitly use the term “middle-income trap”. Seemingly
related works, such as those on middle-income countries or the East Asian development, are not included
if they have not used that specific term.

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
(2) Most of the existing literature does not deny the importance of education, institutions, and exports. The
classification here is based on: (a) the different emphases each work places on the main cause of the MIT;and (b) the extent to which the state should be involved in remedying the problems.

1.1 Getting education and institutions rightStudies in this group analyze middle-income countries with special reference to their
quality of education and institutions. For example, Jimenez et al. (2012, p. 16) explore
Thailand and Malaysia in comparison to Korea, and argue that human capital formation isfundamental to sustaining per capita income growth, as it equips workers with marketableskills. The list of MIT problems in Jitsuchon (2012, p. 16) is longer and summarized as“Thailand’s institutional weaknesses”. In addition to poor educational quality, an
incomplete market in skills training, a low level of research and development (R&D)
activities and spending, and flawed tax structure are included. A more comprehensive study
through probit regressions covering 138 countries from 1955 to 2009 was conducted by
Aiyar et al. (2013). High-quality institutions – defined as: strong rule of law; small
government; and light regulation – are among significant factors contributing to change in
growth slowdowns of middle-income countries.
As for policy suggestions, Jitsuchon (2012, p. 19) proposes that the Thai government
should not interfere with the market but should “devise the right incentive system so that
economic agents would want to pursue their own prosperity...Providing public research
infrastructure and tax benefits for implementing innovation and R&D activities is an
example”. For Aiyar et al. (2013, p. 32), reforms should cover “[p]rudential regulation tolimit the build-up of excessive capital inflows…, measures to enhance regional tradeintegration, public investment in infrastructure projects, and deregulation in areas where redtape is stifling private activity”. In short, the state should concentrate on making the rightincentive systems and investing more in education and institution building.

1.2 Changing export composition by following comparative advantage
Rather than education and institutions, the second strand points to a country’s export
composition as being particularly critical to its catching-up success and failure. Some
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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
studies in this group draw underlying theory from “old-school” development economics.
Felipe et al. (2012, p. 33) argue that development and growth should be seen as “aprocess of structural transformation of the productive structure, whereby resources weretransferred from activities of lower productivity into activities of higher productivity”.
Using a data set of 124 countries from 1950 to 2010, they find that not all products have thesame consequences for economic development. Successful catching up is found in the ones
with a “diversified, sophisticated, and non-standard level export basket”. For example,
while Korea was able to gain comparative advantage in a significant number ofsophisticated products, Malaysia and the Philippines were able to gain comparativeadvantage only in electronics. Specific to Latin American and the Caribbean countries, Linand Treichel (2012) argue that they have been caught in the MIT because of their inability
to upgrade from low to high value-added production. Although not following the above
underlying theory, the econometric findings in Eichengreen et al. (2013, pp. 11–12) also
underline the importance of export compositions, among other contributing factors:“Countries accumulating high quality human capital and moving into the production ofhigher tech exports stand a better chance of avoiding the middle income trap”.
Policy suggestions vary in this group, but generally prefer the state to function as a
facilitator who supports a country’s transformation toward higher value-added exports. For
example, Lin and Treichel (2012) assert that the government should play a crucial role inhelping firms overcome information, coordination, and externality problems. Elsewhere,
Lin (2012, p. 397) maintains that: “The best way for a developing country to achievesustained, dynamic growth is to follow comparative advantage in its industrial development
and to tap into the potential of advantages of backwardness in industrial upgrading”.

1.3 Changing export composition by defying comparative advantage
Similar to the second group, this body of literature emphasizes exports and production
structures. Nevertheless, it explicitly supports the active role of the state in acquiring
indigenous technology for latecomers, even against the country’s comparative advantage
6Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
when necessary. Put otherwise, for this group, comparative advantage is not a matter ofconcern, particularly comparative advantage in trade determined by initial endowment
conditions (see discussion in Lee 2013).
For example, Ohno (2009) maps out four stages of catching-up industrialization: that is,(1) having simple manufacturing under foreign guidance; (2) developing supporting
industries but keeping production under foreign management; (3) internalizing skills andknowledge by accumulating industrial human capital; and (4) acquiring the capabilities tocreate new products and leading global market trends. The MIT is defined as the “glassceiling” between the second and third stages. Proactive industrial policy, with strong
commitment to global integration and private-sector-driven growth, is accorded the key rolein solving the problem (Ohno 2009, pp. 29–30).
Learned from the small-countries perspective,3 the special issue on the MIT in Studies
in Comparative International Development emphasizes the competitive squeeze from thelow and the high end, highlighting the intense pressures on middle-income countries in thecurrent globalization process. In there, Paus (2012, p. 130) demonstrates that: “Sustained
broad-based upgrading happens where there is a proactive government with an overall
focus on capability accumulation and deliberate attention to advancing social capabilities insync with the needs of private sector upgrading.”

II. Lessons from East Asian Catching up
Among various ways to assess the above three bodies of literature, this paper uses the East
Asian catching-up process as the benchmark. While the “first-tier” NIEs, namely, Taiwan,
Korea, and Singapore, offer a representative sample of those who succeeded in sailing over
the trap to reach higher-income levels, the “second-tier” ones, namely, Malaysia, Thailand,3

Five cases include Chile, Dominican Republic, Ireland, Jordan, and Singapore.

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
and the Philippines, represent those stuck in the trap.

2.1 Education and institutions need to link with industrial targets
The first strand of MIT literature considers education and institutions as holding the key toreaching a higher-income level. Nonetheless, the East Asian experience tells us that bothare no guarantor of successful catching up. In order to contribute significantly to economic
growth, education and institutions need to be closely linked with specific industrial targets.
In contrast to conventional wisdom, a number of cross-country studies find therelationships between education and economic growth to be weak (Benhabib and Spiegel
1994; Pritchett 2001) or happen in the opposite direction, that is, from economic growth tohigher quality and quantity of education (Bils and Klenow 2000). In the East Asian cases,
the literacy rates and average years of schooling of most countries were below thePhilippines in 1960.4 Even as late as 1994, the average years of schooling of Indonesia,
Malaysia, and Singapore were still lower than that of the Philippines (Collins et al. 1996).
But among them the Philippines is the least successful catching-up country. In the first-tierNIEs, education policy was designed to tailor the national development strategy, rather thansimply increasing literacy rates or average years of schooling. For example, in Singapore,
the human resource system was restructured in 1981 when the country decided to shift fromimport-substitution to export-oriented industrialization. The new system was aimed at
specific industrial goals, and encompassed not only improving formal education but also
upgrading abilities of existing workforce in the industry through training and vocational
education (for the Skills Development Fund see Kuruvilla 1996). In contrast, while
Thailand and the Philippines were able to create educated workers, their university–
industry linkages have been porous and neglected, which, in turn, have impeded theutilization of labor forces and hampered economic development of both countries (Yusuf

4

In 1960 the Philippines had a literacy rate of 72%, while it was 71% for Korea, 68% for Thailand, 54% for
Taiwan, and 53% for Malaysia (Sarel 1996).

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
and Nabeshima 2010; Mehta et al. 2007).
With regard to institutions, many of MIT literature, particularly Aiyar et al. (2013), is
influenced by the so-called “good governance” institutions meant for minimizing the role ofthe state as well as rent-seeking activities.5 However, the first-tier NIEs were able catch up
with advanced economies despite their institutions being highly deficient by modern
standards – in such areas as democracy, bureaucracy and judiciary, property rights,
western-style corporate governance, and financial institutions (Chang 2002). 6 In Korea, forexample, rent-seeking was rife throughout the high-growth period under the Park Chung
Hee regime. In theory, the assumption that rents and rent-seeking are always counterproductive, and therefore should be eliminated at all costs is problematic because there aredifferent types of rents. For example, the Schumpeterian rents, or the above average profit
the firm earns due to innovation, are vital for ensuring that efficiency and growth aresustained. The implication is that it is how rents have been created and managed thatmatters more for consequent economic performance. Specific to the task of escaping from
the MIT, growth-enhancing institutions are more relevant than good-governance ones (seeKhan and Jomo 2000; Kang 2002).

2.2 Changing export composition against comparative advantage
Beyond education and good-governance institutions, the second strand of MIT literature
revives the old tradition of development economics by reaffirming that structuraltransformation is the key to sustaining growth, and brings a fresh empirical insight byshifting the focus from export expansion to export composition as a prime indicator of5

In Aiyar et al. (2013), better institutional quality denotes: less government ownership of enterprises; lower
income tax rate; fewer regulatory restrictions on the sale of real property; and fewer trade taxes and nontariff trade barriers.

6

Moreover, that “good governance” is a main determinant of economic performance has been challenged on
various methodological grounds, especially the measurement errors and missing-variable considerations(Shirley 2008).

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
structural transformation.
The experience of East Asia is supportive of the above statements. First, since theIndustrial Revolution, long-term growth requires a country’s structural transformation inwhich resources are transferred to higher-value-added sectors (i.e. from agriculture toindustries and services), production is diversified continuously, and labor productivity is
increased significantly. Successful catching up of first-tier NIEs is also the result of suchtransformation, yet in a faster and more intense manner than any other developing region(Felipe 2009; Szirmai 2012). Second, export expansion alone is not sufficient for sustaining
growth. What separates export-led industrialization in Latin America and East Asia isexport composition. The study by Palma (2009) finds that between the 1960s and the 1990s,
the capacity to move into the “high-tech” products of Latin American countries was far
lower than that of the East Asian ones. 7 Even though in the 1990s Latin American countries
managed to reach East Asian levels of market penetration in OECD markets (matchingexport expansion), they did so only in their traditional export products, while NIEs wereable to remarkably increase the share of high-tech products in their exports to the same
markets (different export composition). In other words, exports can be used both as a toolof development and as a test of a country’s success (see also Hausmann et al. 2005).
However, to what extent the role of the state is needed in changing the country’s export
composition remains controversial. Even though overly deviating from comparativeadvantages is deteriorating, it is almost impossible for a backward economy to accumulate
capabilities in new industries without defying comparative advantage and actually entering
the industry before it has the “right” factor endowments. Theoretically speaking, theconcept of comparative advantage, which underlies Lin’s policy advice, is based on
unrealistic assumptions including: (a) the “no” conditions, such as no externalities; noincreasing returns to scale; no factor mobility between countries; no technological change;

7

High-tech products are defined as products with high content of R&D (see Palma 2009).

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
and (b) the “necessary” conditions, such as the perfect competition in all markets in bothcountries (Fine and Waeyenberge 2013). Empirically, high-speed structural transformationin first-tier NIEs was due to various mixtures of proactive state intervention aimed at
upgrading their industrial structures. Korea, for example, set up the state-owned steel mill,
POSCO, and initiated Heavy and Chemical Industrialization program, which promoted
shipbuilding, automobiles, machinery, in the early 1970s when its per capita income wasonly 5.5% that of the US (see detailed discussion in Lin and Chang 2009). Of course,changing export composition and going against comparative advantage can do more harmthan good if industrial and technology policies are not well implemented, the issue to which
we now turn.

2.3 Industrial and technology policies with yardstick and exit strategy
The third strand of MIT literature gives strong weight to industrial and technology policy.
Even though the East Asian experience supports this argument, the fruits of such policy
vary considerably across time and space. Political factors aside, 8 the lack of explicit
yardstick and exit strategy in policy design deserves close attention, as it draws a fine line
between the first- and second-tier NIEs.
First and foremost, despite typically being referred to as the “East Asian model”, thereis neither industrial policy template nor a recipe for a magic bullet. Variation across thetheme does exist. For example, in terms of trade policy, Singapore is much lessinterventionist than Japan and Korea. But Singapore and Taiwan are far moreinterventionist than Japan and Korea when it comes to the role of state-owned enterprises.
The tools and mechanisms are designed differently to suit their socio-political specificities,
as summarized in Table 2.

8

Yet, the deeper causes of second-tier NIEs’ mediocre catching up lie in their political and institutional
deficiencies, for example, the Philippines’ oligarchic structure (see Hamilton-Hart and Jomo 2003).

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
Table 2. Variation in policy and institutional characters of selected first-tier NIEs
Korea

TaiwanSingapore

Infant industry protection

Very strong

Very strong

None

Export promotion

Very strong

Very strong

Strong, but mostly
indirectState-owned enterprises(SOEs)

Used in some criticalindustries

SOEs ran most key
upstream industries

SOEs ran many key
industries

Large private-sector firms

Strongly promoted

Discouraged (most large
firms were SOEs)

Not promoted (large
firms were either SOEs
or TNCs)

Local contents

Stringent local content
rules, creating support
industries

Strong pressures for raisinglocal content andsubcontracting

NoneTransnational corporations(TNCs)

Strongly discouraged
outside selected sectors

Discouraged outside
selected sectors

Aggressive targeting andscreening of high valueadded TNCs

R&D

Private-sector-led

Government-led

Government-led

Centralization in policymaking

Very strong

Very strong

StrongGovernment–private sector
relationship

Top-down direction

Mixture of antagonism,
benign neglect, and central
control

Local private sector
unimportantRole of private-sector
associations

Important, but controlled
by the government

Important, but controlled
by the government

Local private sector
unimportant

PolicyInstitutional characters

Source: Lall (2004, Table 2) and Chang (2006, Table 3).

With regard to the yardstick, the first-tier NIEs used export performance and thediscrepancy between domestic costs and international prices to guide subsequent
government policies for the targeted industries (Amsden 1989; Wade 1990; Lall 2004). The
recipients of policy support in Taiwan were threatened with a penalty if the prescription
were not followed. Taiwan’s control instruments include quantitative import restrictions
and export licensing, foreign investment screening, approval for capital goods imports for
new plants (until 1980), no non-governmental borrowing of foreign funds, and restrictions
on entry to certain sectors. Korea strongly deployed the tight performance monitoring
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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014
system, set by industry associations in concert with the government. Its punitive measures
included: withdrawal of subsidized credit and import licenses; income tax audits; evenprison sentences could be put in place for some serious issues. Moreover, the Korean state
usually set up SOEs to accomplish the task that it could not make the private firms do.
Singapore is less punitive than Taiwan and Korea, given its FDI-led strategy. However,firms would be granted potential rewards only when their activities matched the country’s
specific targets at a given time.
The intensity of the above carrot-and-stick measures is in marked contrast to industrial
policymaking made in second-tier NIEs. In Malaysia, technology transfer was not involved
any ex post monitoring and appraisal, while the ex ante screening was poorly managed, as
exemplified in the case of Proton, the “national car” project. Despite having been granted
substantial protection through high tariffs and excise duties since 1983, Proton has yet todevelop engine manufacturing capability because the Malaysian government has had no
rigorous mechanisms to monitor and improve performance in order to adjust tariffs
downwards according to levels of efficiency (see Doraisami and Rasiah 2001). In Thailand,
effective policy was found only in the local contents restriction in automobiles used
between 1974 and 2000, and measures to support scale economies in petrochemicals in the
1980s. But Thailand’s industrial policies have neither been designed with clear
performance requirements nor been implemented in a long-term manner. In the Philippines,
the performance of its manufacturing sectors has been relatively poor, although emerging
from a well-developed human capital base in the 1950s. Unlike the above-mentioned
countries, which pursued export orientation at the same time they nurtured domestic exportindustries, the Philippines adopted aggressive tariff reduction and investment liberalization
at a significantly faster pace, even faster than required by international commitments, while
its industrial and technology policies were rather generic without clear-cut industrial targets(see Jomo 2003; Felipe 2009).

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014

III. Looking Ahead: Criteria for Targeting
This paper has explored the existing research on MIT and classified it into three groups,
labeled by their policy statements: that is, (1) getting education and institutions right; (2)changing export composition by following comparative advantage; and (3) changing export
composition by defying comparative advantage. Examined through the East Asianexperience, it then argued that education and good-governance institutions cannot
guarantee successful catching-up; both have to be designed to tailor specific industrial
targets. Transforming the economic structure and export composition should be consideredas the crux of sustainable growth. In doing so, the role of the state rather goes beyond a
comparative-advantage-following strategy, with well-designed industrial and technology
policies playing a crucial role in the process.
Two conceptual points should give grounds for the thinking of future policymaking.
First, industrial and technology policymaking should be posited on the same level as othertypes of policymaking, be it education, health, or social policies, in the sense that it willcertainly be confronted with problems and difficulties in terms of implementation. But thetasks of policymakers are to minimize such problems and maximize benefits throughprocesses of policy evaluation and refinement. Second, targeting should not imply an
automatic negative connotation. The debate over the “functional” intervention versus“selective” intervention is almost meaningless at the operational level. Those who support
functional intervention of the state may draw the line of intervention at education, R&D,
and infrastructure that benefits all industries equally. Nonetheless, almost all interventions
in reality inevitably favor some sectors and actors over others, and therefore havediscriminatory effects that amount to targeting. 9 Accordingly, designing a systemic

9

For example, granting R&D subsidies implicitly favor R&D-intensive high-tech sectors. Building railways(instead of roads) implicitly favors the steel industry (more than the auto industry). Among a few policies
that could be regarded as “general” are basic education and healthcare (Chang 2011).

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Veerayooth Kanchoochat,“The Middle-income Trap Debate: Taking Stock, Looking Ahead,”Kokusai
Mondai (International Affairs), No.633, July/August 2014selective policy ex ante should be a more productive and accountable enterprise than
deploying it with blind prejudice.
Building upon the above two conceptual grounds, future research should move on toseek out potential criteria for effective targeting. One recent example in this thread is foundin Lee (2013), which argues that leapfrogging is more likely to happen in the sectors
characterized by rapid technological change. The success of Taiwan and Korea, Lee argues,is largely due to their overarching strategy toward “short-cycle”, technology-based
sectors.10 Short-cycle technologies mean the sector not only has less reliance on existing
technologies but also has a greater opportunity for the continued emergence of newtechnologies. For example, Korea’s catching up with Japan in high-definition TVs would
not have been successful if in the 1980s Korean electronics companies did not target the
emerging digital technology-based products more aggressively than Japanese companies,
which decided to continue manufacturing the then dominant analogue products.
In summary, the exploration into criteria for targeting like Lee’s technological cycle
time should be one of the crucial themes of future MIT research. After all, however, thediscussion herein is confined to merely economic issues and almost all about growth. In a
broader development perspective, growth is a less worthwhile, and often conflicting,mission if it does not lead society to a more equal distribution of wealth (see Wilkinson andPickett 2010). For a developing country to go beyond the middle-income stage, a national
development strategy should encompass strong redistributive elements. Otherwise, the trap
could extend from an economic realm into political and social ones.

10

Lee (2013) measures the cycle time of technologies by the mean citation lag, which is the time difference
between the application year of the citing patent and that of the cited patents.

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