Middle Income Trap: A Dynamic Panel Data Analysis

The middle income trap describes countries that have not been able to accomplish sustainable economic growth and have been stuck in the level of income per capita for many years. In this study, countries located in OECD have been analyzed by using savings rate, R&D expenditures and high technology export data and investigated effect on sustainable economic growth. The variables have been analysed by applying dynamic CCEGM model. Positive results have been obtained as expected. In addition, while variable of R&D expenditures have highest impact on the growth performance of 20 countries, variable of domestic savings have highest impact on the growth performance of middle income countries such as Turkey. In this context, since investments to increase R & D expenditures will affect growth in the long run, middle income countries should be produce priority policies aimed at increasing domestic savings