How Can We Escape the Middle Income Trap?

Abstract

Dániel Palotai – Barnabás Virág Competitiveness and Growth National Bank of Hungary, 2016 The global financial crisis has refocused attention on the sustainability of economic processes and the competitiveness of the economy. It has become obvious that lasting growth is not possible without balance and competitiveness. Accordingly, after having taken the most needed crisis management actions, Hungary has achieved a complete turn-around in terms of its economic policy, which, by breaking away from previous dichotomy, has aligned macro-financial balance and real economy-related growth. The structural adjustments and stabilisation prepared the ground for mutually reinforcing competitiveness reforms, as a competitive Hungarian economy represents a competitive labour market and human resources, a competitive corporate sector, a competitive state and a competitive financial and banking system all at the same time. A monograph entitled Competitiveness and Growth published by the National Bank of Hungary may serve as a common thread for the required transformations, which envisages the need for improving the balance between production factors and value creation capabilities, so that Hungary might step on a new path leading to balanced status, and might escape the middle income trap. The societal utilisation of the monograph is clearly marked by the fact that by the beginning of 2017 actual actions have been taken in the case of many proposals mentioned in the paper.