Comprehensionhard · Past Paper

Read the passage: The 'Middle Income Trap' is a situation where a country's growth plateaus after reaching middle-income levels, making it difficult to transition into a high-income economy. This is often due to a loss of competitive advantage in low-wage manufacturing. Question: Why do countries get 'trapped' in the middle-income stage?

AThey have too much money
BThey lose their competitive edge in low-wage sectors but aren't yet high-tech
CThe population stops growing
DThey stop trading with other nations

✓ Correct Answer: BThey lose their competitive edge in low-wage sectors but aren't yet high-tech

The trap occurs when a country can no longer compete with low-wage nations but hasn't yet reached high-tech efficiency.

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