India May Take 75 Years To Reach A Quarter Of US Per Capita Income, Says World Bank
Depending on their stage of development, all countries need to adopt a sequenced and progressively more sophisticated mix of policies, it said.
According to a World Bank report, over 100 countries, including India, face significant challenges in achieving high-income status in the coming decades. It suggests that New Delhi might need nearly 75 years to reach even a quarter of the per capita income of the United States.
According to the 'World Development Report 2024: The Middle Income Trap', it will take China over a decade to achieve a per capita income equivalent to one quarter of that of the United States, while Indonesia will need nearly 70 years to reach the same milestone.
Drawing on insights from the past 50 years, the report reveals that as countries become more prosperous, they often encounter a 'trap' when their per capita income reaches about 10% of annual US GDP per person, currently around $8,000. This level falls within the World Bank's classification of middle-income countries.
At the end of 2023, 108 countries were classified as middle-income, each with annual GDP per capita in the range of $1,136 to $13,845. These countries are home to six billion people—75% of the global population—and two out of every three people living in extreme poverty.
The road ahead has even stiffer challenges than those seen in the past—rapidly ageing populations and burgeoning debt, fierce geopolitical and trade frictions, and the growing difficulty of speeding up economic progress without fouling the environment, it said.
"Yet many middle-income countries still use a playbook from the last century, relying mainly on policies designed to expand investment. That is like driving a car just in first gear and trying to make it go faster," the report said.
If they stick with the old playbook, most developing countries will lose the race to create reasonably prosperous societies by the middle of this century, said Indermit Gill, chief economist at the World Bank Group and senior vice president for development economics.
"At current trends, it will take China more than 10 years just to reach one-quarter of US income per capita, Indonesia nearly 70 years, and India 75 years," the report said.
Gill also said that the battle for global economic prosperity will largely be won or lost in middle-income countries.
The report proposes a strategy for countries to reach high-income status. Depending on their stage of development, all countries need to adopt a sequenced and progressively more sophisticated mix of policies.
Since 1990, only 34 middle-income economies have managed to shift to high-income status—and more than a third of them were either beneficiaries of integration into the European Union, or of previously undiscovered oil, the World Bank said.
(With Inputs From PTI)
