The Middle-Income Trap and Some Recommendations for Vietnam

The middle-income trap was first introduced in 2007.There are three definitions of the middle-income trap.The first is when a middle-income country becomes stuck in a narrow income range for an extended period.The second involves making incorrect assessments and institutional reform policies that are incompatible with the structural characteristics of middle-income countries.The third is the absence of convergence with developed market economies, often the United States.There are three reasons that explain the slowdown in growth for middle-income countries, leading them to become trapped in the middle-income trap: the natural consequences of the catch-up process, growth-hindering policies, and political growth traps.From this, three recommendations for Vietnam's development are put forward: upgrading production technology; administrative reform, reducing business permits, and creating a healthy business environment; and building a strong public administration system.