The development economics concept describing countries that successfully industrialize to middle-income status but then stagnate — unable to transition to high-income knowledge economies.
The trap mechanism: countries in early development compete on low wages and resource extraction; middle-income countries lose this advantage (wages rise) but haven't yet developed the high-productivity, high-skill industries that characterize rich countries. The transition requires institutional reform, educational upgrading, and innovation capacity that many middle-income governments struggle to achieve. China's attempt to escape the trap (through massive R&D investment and technological upgrading) is the defining development economics question of the 2020s.
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