Testing the Middle Income Trap for D-8 Countries with StructuralBreak Tests

The middle-income trap (MIT) has been one of the most discussed issues in the economic literature and political agendas in recent years. In general, the concept of MIT refers to the situation of a country that reaches middle-income country status at the end of a rapid growth process, but cannot catch up with developed countries by staying in the middle-income range. The concept entered the literature with a World Bank report titled "An East Asian Renaissance: Ideas for Economic Growth" prepared by Gill and Kharas (2007). The report explains the reason for the slowdown in economies after a rapid economic growth period. In other words, as the birth of the concept, it is to explain the state of stagnation that comes with the slowdown in economic growth. To date, different methods have been used to calculate MIT. In the literature, this situation is divided into two as descriptive and empirical / quantitative definitions. The most preferred model in the national literature is the technique of Robertson and Ye (2013). For this reason, Robertson and Ye's (2013) technique was used while determining the OGT for the relevant countries in the study. The research covers the D-8 countries (Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey). When the literature is examined, it is seen that there are separate studies on D-8 countries, but there are no studies covering the D-8 group. Thus, this situation constitutes the motivation of the study. The data of the research were taken from the World Bank World Development Indicator (WDI) database. The analysis, which was carried out with the GNP data per capita at fixed prices between 1980 and 2019, was carried out with the Robertson and Ye (2013) technique. First of all, the logarithms of the data were taken, and the difference between them and the US data, which is the criterion country, was taken. Later, the analysis was carried out with the Extended Dickey-Fuller (ADF) (1981) (1981) and Zivot-Andrews (ZA) (1992) and Kapetanios (2005) tests, which allow structural breaks, which are traditional methods. Eviews 9 for ADF and ZA tests and Gretl econometrics programs for Kapetanios test were used in the analysis processes. With the results obtained from the research, no country is in the middle income trap as a result of the ADF (1981) test. According to the ZA (1992) test, which allows for structural breaks, Egypt, Indonesia, Pakistan and Turkey are in the middle income trap. According to Kapetanios (2005) test, in addition to the ZA (1992) test, it was concluded that Nigeria and Iran are in the middle income trap.