Middle income trap

In economics the middle income trap happens when a country's GDP is stuck at some level and cannot increase.

The World Bank says that South Africa and Brazil have fell into the trap.

Economists think this happens because as a country sells more and gets richer, it pays higher wages. This increases the cost of selling stuff. So the countries lose their competitive advantage and get stuck, unable to sell more and get richer.

The World Bank says a country is in the 'middle-income range' if its gross national product per person stays between $1,000 to $12,000 (in 2011 prices).

 I don't want to fall into the trap 
To avoid the trap, a country could find better ways to make goods and reduce the cost of making them. They could also find new people or countries to sell their goods to. An increasing middle class could also use their money to buy fancy stuff that helps further promote growth: this includes better education, better technology and infrastructure, studying science and technology to create more innovations.

 References 

Category:Economics