Role Of Social Development Initiatives In Improving Productivity And Escape Middle-Income Trap

Ever since Gill and Kharas (2007) introduced the concept of the middle-income trap 每 many researchers, policymakers, and journalists have agreed upon the existence of the concept and explored why so many middle-income countries have not been able to fully become high-income, highly-industrialized countries over the last half-decade. T

he trap mainly refers to sustained growth becoming increasingly difficult once a country reaches a GDP per capita of around $10, 000. Evidence suggests that Latin American and Middle Eastern countries suffered middle-income traps for four or five decades, but the situation seems to be improving.

Developing countries like India are also trying to improve the ease of living of their citizens through initiatives such as the Jal Jeevan Mission.

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With its aim to improve the living standard of rural communities, the Jal Jeevan Mission is changing India＊s socio-economic landscape through water since August 2019. Access to safe water, sanitation and hygiene (WASH) services can better living conditions by increasing health standards, life expectancy, education, gender parity and employment opportunities.

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However, with the current pace of globalization, it has become increasingly difficult for middle-income countries to narrow the capabilities gap, as they have fewer resources to innovate and get up to speed with present technologies. Upgrading along global value chains (GVCs) is fundamental to reversing the economic decline.

Therefore, in my view, social development initiatives that focus on productivity gains and developing professional capabilities must be given a fillip. Existing production systems need to be redesigned, elements of innovation ecosystems need to be re-evaluated, and creating a strong advocacy framework for the development of skills needs to be put in place.

Skilling will especially help people who find themselves in poverty and young people who are in search of jobs.

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According to Smile Foundation, a leading NGO in India, integrating women in India＊s growth story through education and skilling will open better socio-economic opportunities for the country. Since 2005, Smile Foundation has been running a women＊s empowerment program called ＆Swabhiman＊ specifically aimed at marginalized and socially excluded women and adolescent girls.

Women＊s entrepreneurship training is a key component of the program, where women producers are shown how to take ownership of their businesses and manage their own profits while working towards better social connectivity.

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Another way in allowing India to improve productivity and escape the middle-income trap is by skilling persons in digital services that can be transported across the world 每 such as in the industries of education, health, insurance, and call centres. With the end of the commodity boom, modern services that can be traded are growing.

For example, through the Madhya Pradesh Skills Development project, the State Government, is looking to establish an advanced TVET institute of international standards to introduce high-quality, technology-oriented skills training for the state's priority sectors. The project looks to modernize 10 major industrial training institutes (ITIs) as well.

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Additionally, another crucial way for the country to escape the middle-income trap, is through policy advocacy 每 by working with and inspiring policymakers to promote societal transformation, entrepreneurship, and innovation to begin reaping the benefits of information networks and skilled labor instead of cheap labor and knowledge spillovers.

Additionally, the macroeconomic, trade and industrial policies required for successful GVC participation can play an important role in the factors that have contributed to economic stagnation in present-day middle-income countries.

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In conclusion, a rapid expansion of modern sectors will need to be seen among countries facing the middle-income conundrum. This would be useful in practice when traditional sectors with low productivity shed labor and new-age sectors grow by hiring more labor.

This process of structural reform may be difficult for a subcontinent as large as India to imbibe, but with the right ownership, development of implementation capabilities and a macroeconomic stance 每 we＊ll be well on our way to shedding the definition of being a middle-income country.

The next few decades are undoubtedly, pivotal for India＊s growth.

The author is Dean and Head, Central University of South Bihar. The views expressed are author's own.