The Middle-Income Trap: An Analysis on Turkiye

Middle-income countries with low or moderate growth rates experience much more volatility in their growth rates than high-income countries. The achievement of high-income levels depends on relatively high rates of stable economic growth. The objective of this study is to estimate whether Türkiye, which is in the upper-middle income country group, is in the middle-income trap or not by utilizing annual data for the period spanning from 1960 to 2022. For this aim, Robertson and Ye (2013) approach was adopted for the empirical analysis. In the analysis, the stationarity test of the GDP series is implemented by RALS-LM and RALS-ADF and Fourier-based Fourier KPSS, Fourier ADF, and Fourier GLS unit root tests. The results of the unit root test indicate that Türkiye is not in a middle-income trap. For years, Türkiye has been considered an upper-middle-income country, though its economic evolution rates shift from year to year. Such fluctuations can destabilize the economy and hinder the pursuit of sustainable growth. To tackle these difficulties, Türkiye needs to address its economic vulnerabilities and strengthen its economic resilience. In this regard, prioritizing high value-added sectors and increasing investments in them can lead to more stable and sustainable economic evolution.