1. How to overcome the middle-income trap Dr. Pingfan Hong UN/DESA/DPAD May 16, 2013 Minsk, Belarus

2. 2 Outline Macroeconomic prospects for the MICs in the aftermath of the global financial crisis The rise of MICs in the global economy How to overcome the middle-income trap Strengthen UN development cooperation with MICs

3. 3 Recovery from the global financial crisis GDP growth % Source: UN/DESA World Economic Situation and Prospects 2013

4. 4 Contribution to global growth

5. 5 Growth prospects for CIS, and South-Eastern Europe

6. 6 Macroeconomic policy challenges for MICs Dealing spillover effects from the unconventional monetary policies by developed countries: Increased volatility in capital flows, commodity prices and exchange rates Policy mix in accordance with the specific situation in individual countries

7. 7 The rise of MICs in the global economy

8. 8 The share of MICs in the global economy has increased

9. 9 A too optimistic projection?

10. 10 A too optimistic projection? (2)

11. 11 A too optimistic projection? (3)

12. 12 The middle income trap Source: World Bank

13. 13 The middle income trap (2)

14. 14 Factors entrapping MICs Productivity gains exhausted from the model of growth at low income level: Shift of workers from rural to urbanreaching a turning point; Reaping the gains from imported technology Lack of investment in human capital and in R&D Ending of demographic dividend

15. 15 R&D spending among countries Source: Keun Lee (2013) CDP presentation

16. 16 More challenges for MICs today than 50 years ago in the area of sustainable development

17. 17 Strengthen UN system development cooperation with MICs Align programme with national development strategies Develop a specific framework for development cooperation with MICs Enhance capacity of MICs in the areas: -Higher value-added industries -Diversification -Employment -Coherent strategies in economic, social and environmental -Macroeconomic management and prudential financial regulation -Hubs for South-South cooperation Increase voice and voting power of MICs in IFIs