In an article written six years ago called “Escaping The Middle-Income Trap”, Berkeley economist Barry Eichengreen showed that structural growth pick-ups and slowdowns are almost always because of an increase/decrease in TFP. At $1,750 per capita GDP, India is classified as a lower middle-income country (per capita GDP between $1,026 and $4,035). It achieved that status in 2007 and is likely to remain a middle-income country for many more years. Brazil, Mexico and South Africa have remained middle-income countries for over 25 years now. Given the low odds, escaping the trap requires meticulous long-range thinking and we would do well to begin now.

Source: Mint February 19, 2017 18:07 UTC