Long-run growth is about the structural transformation (diversification and upgrading) of the economy, itself a function of the accumulation of capabilities that allows a country to produce new and more unique products. In this paper, we develop an "Index of Opportunities" for 96 non-high-income...

This paper provides a working definition of what the middle-income trap is. We start by defining four income groups of GDP per capita in 1990 PPP dollars: low-income below $2,000; lower-middle-income between $2,000 and $7,250; upper-middle-income between $7,250 and $11,750; and high-income above $11,750....

We forecast average annual GDP growth for 147 countries for 2010–2030. We use a cross-country regression model where the long-run fundamentals are determined by the countries’ accumulated capabilities and the capacity to undergo structural transformation.

The key factor underlying China's fast development during the last 50 years is its ability to master and accumulate new and more complex capabilities, reflected in the increase in diversification and sophistication of its export basket. This accumulation was policy induced and not the result of...