Middle-income trap and innovation policies: East asian experience and lessons for Turkey

Abstract

According to the definition of the World Bank, countries, caught in the "Middle-income trap", are the countries that have weakening competitiveness to the standard of manufacturing industry products against the poor, low-wage countries, on the other hand, have difficulty in converging to rich, innovation-based growth countries. In recent years, Turkey has made a significant increase in the level of per capita income with the help of its growth rate. However, it does not seem possible, going beyond this, catching up with developed countries with available technological capability level of economic structure. The aim of this study is to discuss necessary policy alternatives in order to save Turkey's economy from the middle-income trap and to expose inability of the neoclassical approach which is the basis of existing industrial strategy. Within the scope of study, recommendations will be submitted to Turkey in the light of the experience of countries which have escaped the middle-income trap.