What helps countries avoid the middle-income trap? A study of policy and institutional determinants

Abstract: The essay identifies the factors that help countries avoid the middle-income trap. We study the effect of institutional indicators, and the educational and technological policy variables on the income growth of the middle-income countries, with the focus on the upper-middle income countries; using the Cross-section OLS estimation and the Fixed-Effects panel estimation. For the countries that have already passed the upper-middle income threshold, the tertiary education enrolment rate and technological policy variables have a positive and significant effect on the income growth. Regarding institutional indicators, the Strong Civil Society and the Bureaucratic Quality only have a positive effect on the growth in the estimation across countries.