World Development Report: It may take India over 75 years to reach one quarter of US per capita income.
A recent World Bank report highlighted that India, along with more than 100 other countries, will face significant challenges in the coming decades in their quest to become high-income nations. The report also projected that India might take up to 75 years to achieve a quarter of the income per person of the United States. In contrast, China is anticipated to take slightly over 10 years to reach the same stage, while Indonesia may require nearly 70 years, as revealed in the World Development Report 2024: The Middle Income Trap.
The report delves into the economic progress of the past 50 years and identifies a common "trap" that countries fall into when their annual GDP per person reaches around 10% of the US level, which is approximately $8,000 today. This places them in the category of middle-income countries according to the World Bank. As of the end of 2023, 108 countries were classified as middle-income, with annual GDP per person ranging from $1,136 to $13,845. These nations, which are home to six billion people, encompass 75% of the global population and include two out of every three people living in extreme poverty.
The future presents even more formidable challenges, such as rapidly aging populations, growing debt, geopolitical and trade tensions, and the difficulty of progressing economically without causing harm to the environment.
The report warned that many middle-income countries continue to rely on outdated policies, primarily focused on expanding investment. The report likened this approach to driving a car solely in first gear and trying to increase speed.
Without revising their approaches, most developing countries will likely encounter obstacles in building prosperous societies by mid-century, according to Indermit Gill, Chief Economist of the World Bank Group and Senior Vice President for Development Economics.
Gill stressed that the battle for global economic prosperity will largely hinge on the outcomes in middle-income countries. The report proposes a strategy for achieving high-income status, involving the adoption of a sequenced and increasingly sophisticated mix of policies tailored to each country's stage of development.
Since 1990, only 34 middle-income economies have successfully transitioned to high-income status. The World Bank's findings revealed that more than a third of these countries either joined the European Union or benefited from newly discovered oil reserves.
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