World Bank Released World Development Report, 2024

On August 1st, 2024, World Bank released World Development Report 2024. According to report more than 100 nations, including India and China, face “serious obstacles” in their transition to high-income developed economies amid increasing chances of getting stuck in the so-called middle-income trap.

Key Points

The report noted that at the current pace, India will take 75 years to reach a quarter of the US's per capita income, compared to Indonesia's 70 years and China's 10 years.
The multilateral institution highlighted that the 108 middle-income economies, with per capita incomes between USD 1,136 and USD 13,845, face significant obstacles to becoming high-income countries.
Since 1990, only 34 countries have escaped the middle-income trap, where per capita income stalls at USD 8,000 annually or 10% of the US GDP.
The main challenge for 108 middle-income countries is the crumbling of traditional growth environments, such as connected trade and open economies. Additionally, climate change poses a significant hurdle, with adaptation costs being higher for poorer countries than for richer ones.

The “3i strategy”

Depending on their stage of development, countries need to adopt a sequenced and progressively more sophisticated mix of policies:

Low-income countries can focus solely on policies designed to increase investment—the 1i approach.
Lower-middle-income countries must shift gears and expand the policy mix to 2i, investment + infusion.
Upper-middle-income countries need to shift gears yet again—to 3i: investment + infusion + innovation.

World Development Report

The World Development Report (WDR) is an annual publication by the World Bank is released since 1979.
It provides in-depth analysis and insights on critical development issues facing countries around the world. Each edition of the report focuses on a specific theme relevant to global development.