“Middle Income Trap”; the position of Algerian economy: a comparative analysis overview

Allaoui, Elhassen and Tidjani, Chemseddine and Lacheheb, Miloud (2015): “Middle Income Trap”; the position of Algerian economy: a comparative analysis overview. Published in: International Journal of Economics, Finance and Management Sciences , Vol. Vol. 3, No. No. 4 (17 June 2015): pp. 337-346.

Abstract

Economic history has shown that few middle-income countries have successfully attained high-income level.Effective transition from middle to high-income level requires an efficient resource use, private sector improvement, productivity enhancement, and technology based rather than labor based production. Failure of doing so, undoubtedly, leads to income trap, whereas a country caught in middle-income level for a long period. Therefore, this paper attempts to highlight the Algerian economy patterns since its independence to current position with regard to middle-income trap criteria, likewise, reasoning the causes that headed Algeria to middle income trap for over 30 years. Moreover, this paper goes further ahead in cross-country evidence of how Algeria compares with peer countries from MENA region. Likewise our results shows that the Algerian economy has better position than Egypt and Yemen. However, Algeria is still behind UAE that classified in high-income level, where Algeria has known a slow growth rate during the last 50 years. Finally, remedies are suggested as a way out from Middle-income trap, and to promote high growth rate in order to achieve high-income level in the future.

• Item Type: MPRA Paper
• Language: English
• Keywords: Algerian Economy, Comparative Analysis, Economic Position, Middle-Income Trap, MENA Countries
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E66 - General Outlook and Conditions; F - International Economics > F6 - Economic Impacts of Globalization > F63 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development

References

[1] Achour Tani Yamna. (2014). The analysis of economic growth in Algeria. Doctoral thesis, University of Tlemcen, pp. 30 - 32.

[2] Agénor Pierre-Richard, and Otaviano Canuto. (2012). MiddleIncome Growth Traps. World Bank Policy Research Working Paper N°6210.

[3] Agénor Pierre-Richard, and Otaviano Canuto. (2015). MiddleIncome Growth Traps. Research in Economics (Elsevier), http://dx.doi.org/10.1016/j.rie.2015.04.003

[4] Agénor Pierre-Richard, Otaviano Canuto, and Michael Jelenic.(2012). Avoiding Middle-Income Growth Traps. World Bank Economic Premise (PREM Network), N°98.

[5] Anna Jankowska, Arne Nagengast and José Ramón Perea. (2012). The product space and the middle-income trap: comparing Asian and Latin American experiences. Working Paper No. 311. OECD DEVELOPMENT CENTRE.

[6] Aaron.F, Ejaz.G, Saurabh.M. (2013). How to Avoid Middle Income Traps? Evidence from Malaysia. Policy Research Working Paper N° 6427, World Bank.

[7] Cai, F. (2012). Is There a “Middle-income Trap”? Theories, Experiences and Relevance to China. China & World Economy, 20: 49–61, doi: 10.1111/j.1749-124X.2012.01272.x

[8] Derouassi Messaoud. (2006), Fiscal policy and its role in achieving economic balance (the case of Algeria) 1990-2004. Doctoral thesis, University of Algeria, pp. 340-341.

[9] Eva Paus. (2012). Confronting the Middle Income Trap: Insights from Small Latecomers. St Comp Int Dev, Springer Science+Business Media, LLC.

[10] Eichengreen, Barry, Donghyun Park and Kwanho Shin (2012).When Fast Growing Economies Slow Down: International Evidence and Implications for China. Asian Economic Papers 11, pp.42-87.

[11] Eichengreen, Barry, Donghyun Park and Kwanho Shin (2013). Growth Slowdowns Redux: New Evidence on the Middle-Income Trap. Working Paper 18673, National Bureau of Economic Research.

[12] Gill, I., Kharas, H., Bhattasali, D. et al. (2007), An East Asian Renaissance: Ideas for Economic Growth. Washington, DC, World Bank.

[13] Gianluca.G, Marco Vivarelli. (2010). Is inequality the price to pay for higher growth in middle-income countries? Revisiting the Kuznets hypothesis in the event of a skill-biased technological change. J Evol Econ (2010) 20:265–306. Springer - Verlag.

[14] Hakim Darbouche, (2011). Algeria’s failed transition to a sustainable policy coming to yet another crossroads. MEDPR technical report N° 8.

[15] Jesus Felipe, Arnelyn Abdon, and Utsav Kumar . (2012). Tracking the Middle-income Trap: What Is It, Who Is in It, and Why?. Working Paper N° 715, Levy Economics Institute of Bard College, NY, USA.

[16] Kohli, H. A., & Mukherjee, N. (2011), Potential Costs to Asia of the Middle-Income Trap. Global Journal of Emerging Market Economies, Vol. 3, Issue. 3: 291-311.

[17] Kharas, H., & Kohli, H. (2011). What Is The Middle-Income Trap, Why Do Countries Fall into it, and How Can Be Avoided?, Journal of Emerging Market Economies, Vol.3, Issue. 3: 281-289.

[18] Kanapathy.V, Herizal.h, Pasuk.P, and Pornthep.B. (2012). Middle-income trap: Economic myth, Political reality - Case studies from Malaysia and Thailand -. The Asia Foundation.

[19] Ohno, K. (2009). Avoiding the middle-income trap. Renovating industrial policy formulation in Vietnam. ASEAN Economic Bulletin, Vol 26 N°1, pp 25–43. Published by Institute of Southeast Asian Studies.

[20] Peter E.Robertson, Longfeng Ye. (2013). On the Existence of a Middle Income Trap. Economics Discussion Paper 13.12, University of Western Australia, http://ssrn.com/abstract=2227776

[21] Rodrik, D. (2007). One Economics Many Recipes: Globalization, Institutions, and Economic Growth. Princeton, NJ: Princeton University Press.

[22] Seddiki Malika. (2013). Public Investment and Governance in Algeria: What Relationship?. International conference, University of Setif 1, Algeria.

[23] Tran, V.T. (2013). The Middle-Income Trap: Issues for Members of the Association of Southeast Asian Nations. ADBI Working Paper N°. 421, Tokyo: Asian Development Bank Institute, May 2013.

[24] World Bank data. (2013). Country and lending groups, http://data.worldbank.org/about/country-classifications/country-and-lending-groups#Upper_middle_income, Accessed 29 Mars 2014.

[25] World Development Indicators (2014). http://databank.worldbank.org/data/views/variableselection/selectvariables.aspx?source=world-development-indicators#s_g, Accessed 02nd April 2014.

[26] Young, Alwyn. (1995). The tyranny of numbers: confronting the statistical realities of the East Asian growth experience, The Quarterly Journal of Economics, 110, (3), Oxford University Press, pp. 641-680.

[27] Yanrui Wu. (2013). Productivity, Economic Growth and Middle Income Traps: Implications for China. The Business School University of Western Australia.