Escaping Income Trap Index (EITI)

Abstract

The Middle Income Trap is a major risk for many middle-income countries that cannot improve their manufacturing industry performance during the development phase and transition to the R&D and innovation-oriented service sector. Middle-income Countries (MICs) which were unable to increase their National Income Per Capita (NIPC) to become High-Income Countries (HICs) and were stuck at a certain income threshold fell into the Middle Income Trap (MIT). The study aims to analyze to measure the competitiveness of 65 countries with min-max methodology and rank them , so that the weakness indicators can be determined to setup a road map to increase competitiveness of Türkiye and to escape from MIT. In this study, 65 countries where 38 of them were HICs which might be taken as an example of economic development success and 26 of them as MICs those had strict competition in the international market along with Türkiye have been investigated by Escaping Income Trap Index (EITI). The index consisted of 5 sub-indices (dimensions) and 82 indicators. EITI scores were calculated for 65 countries in the study, and the relationships between index scores and National Income Per Capita (NIPC) was tested with both with the Cross-Sectional Data Method for the 2013-2014 period and with the Panel Data Method for the twenty-one periods between 1993-1994 and 2013-2014. It has been determined that Türkiye, which has a significant weight in the global economy, does not have a successful ranking in the general index and sub-indices obtained in the study. Türkiye ranked 61st in the index ranking calculated for 2013-2014, in which Switzerland ranked first, and the ratio of Türkiye's EITI score to the leading country scores was 65 percent. In other popular indices created by international organizations, this rate was 60 percent on average.