Lessons on Escaping the Middle-Income Trap in Asian Countries

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Escaping the middle-income trap and achieving high-income status is a key development goal for ASEAN member countries. This goal is based on the belief that economic success will lead to broader prosperity in other areas. However, a report by the Asian Development Bank (Report No. 1507), “The Dark Side of Escaping the Middle-Income Trap: A Sage Study of Asian High-Income Countries,” raises a critical question: Is economic wealth alone sufficient to promote human flourishing across social and environmental dimensions, which are essential to sustainable development?

This report uses the SAGE framework to assess human flourishing. The framework consists of four dimensions:

• Solidarity: Social cohesion and sense of belonging
• Agency: The ability to make choices and control one’s own life
• Gain: Economic wealth, measured by income per capita
• Environmental Stewardship: Responsibility towards nature and ecosystems

The findings reveal that although income per capita increased in countries like Japan, Singapore, and South Korea, improvements in the other SAGE dimensions were inconsistent. In Japan, increased income was negatively associated with personal agency and environmental care, while no clear relationship was found with social solidarity.

In Singapore, higher income correlated positively with social cohesion but did not relate to personal agency or environmental responsibility. In South Korea, a significant negative relationship was found between income and environmental outcomes, with other dimensions showing no significant change.

These findings suggest that economic development alone does not guarantee social or environmental progress. In fact, after escaping the middle-income trap, countries may face three new traps:

1. Social Fragmentation Trap – Rising income inequality has divided populations. For example, Japan faces issues of elderly isolation, Singapore has deeply rooted class divisions, and many young people in South Korea lack faith in the economic and social systems.
2. Pressure from Hyper-Competitive Growth – Rapid economic growth has created high pressure in work, education, and cultural expectations for personal success. Japan has seen work-related deaths, and South Korean youth experience intense academic stress. Cultural shifts have weakened family structures, increasing loneliness among the elderly.
3. Environmental Degradation Trap – Industrial and technology-driven growth has caused severe environmental damage, such as air pollution, waste management problems, and high energy consumption. Although green technologies have been developed in recent years, these issues persist.

The report recommends that developing countries should not focus solely on achieving high income. Instead, they should adopt a more comprehensive development model that promotes human flourishing in all dimensions. Key suggestions include:

• Promoting inclusive growth and reducing inequality through tax and welfare systems
• Strengthening community cohesion by supporting local economies, culture, and social participation
• Creating participatory decision-making systems to improve transparency and accountability
• Reforming education—both academic and vocational—to align with labor market changes and sustainability
• Enforcing strict environmental regulations and encouraging private sector accountability for environmental impacts

Author:
Mr. Wimon Punkong
Deputy Executive Director (Academic)
International Institute for Trade and Development (Public Organization)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section/World Beat
Volume: 38 Issue: 12926
Date: Wednesday, Jun. 18, 2025
Page: 8 (bottom)
Column: “Asean Insight”