Poland avoided the middle-income trap. Or does it even exist?

This article is a part of Poland Unpacked. Weekly intelligence for decision-makers

Just a decade ago, many economists warned that Poland could become stuck among countries with a medium level of development. Today, it is clear that this scenario has not materialized. Does this prove that the middle-income trap is a myth, or rather that Poland managed to avoid it thanks to an exceptional combination of factors?

For ten years, one of the central themes in Poland’s economic debate was the risk of falling into the so-called middle-income trap. Put simply, it refers to a country’s economic development stalling before it reaches the status of a highly developed, wealthy economy.

One of the strongest advocates of this concept was Mateusz Morawiecki, then deputy prime minister and minister of development. The Strategy for Responsible Development, which he designed and promoted with considerable ambition, was intended precisely as a remedy to prevent Poland from falling into the middle-income trap, as well as other “development traps”.

The section devoted to diagnosing Poland’s economic situation included the following passage: “Over the past 25 years, Poland has been closing the gap with developed countries. However, we are now seeing the exhaustion of the existing drivers of growth and competitiveness. Without creating new ones, Poland will become stuck among middle-income countries, which is why new engines of development are needed.”

A decade later, we know that Poland has become a highly developed economy. According to Eurostat data, income per capita adjusted for differences in purchasing power reached 81% of the European Union average in 2025. By this measure, Poland has overtaken Portugal, and catching up with Spain and Italy within the next five years appears realistic. Poland has also already reached approximately 60% of U.S. GDP per capita.

At this point, two questions are worth asking. First, does the middle-income trap actually exist at all? And if it does, why was Poland able to avoid it?

Does the trap exist – or not?

The concept of the middle-income trap was first described in a 2007 World Bank report. It focused primarily on countries in Asia and the Middle East that had remained stuck at a similar level of development for decades. Since then, the idea of the middle-income trap has become a prominent theme in development economics.

The data appears to support the concept. Only 34 out of 108 countries classified by the World Bank as middle-income economies in 1990 had managed to move into the high-income group by 2024. To a large extent, however, these were relatively small countries – their combined population does not exceed 250 million people. The remaining economies, after 35 years, are still at a middle level of development.

A certain ceiling in the development of many economies is clearly visible. The chart above shows income per person, adjusted for differences in prices, for four major Latin American economies between 1950 and 2022. It is measured relative to income per person in the United States, the world’s richest large economy.

Chile, widely regarded as South America’s biggest economic success story, has been unable to break above the level of 40% of U.S. income per person for more than a decade. Mexico has hovered around 30% for half a century. Brazil’s “ceiling” is at a similar level. The picture is even weaker in Peru, which, after two decades of stagnation in the 1990s and 2000s, rebuilt its income level to just above 20% of the U.S. figure. For more than a decade, however, this ratio has remained virtually unchanged.

The group of countries where relative development has stalled compared with the core of the global economy also includes Colombia, Costa Rica, Ecuador and Uruguay.

Similar examples can be found in other parts of the world. In Asia, Thailand is one such case: for the past decade, it has been unable to exceed 30% of U.S. income levels. In Africa, South Africa provides another example, with the gap between the country and the developed world widening in recent years. More broadly, the economy has failed to achieve an income level higher than 30% of that of the United States.

Or is it more of a ceiling?

The concept of the middle-income trap has, however, attracted many critics. They argue that there is, in fact, no single trap that is specific to middle-income countries. Instead, there are various development barriers that cause the process of catching up with the most advanced economies to come to a halt. This can happen at different stages of development – in low-income, middle-income, and even wealthy countries.

Criticism also focuses on the lack of a clear threshold for when a country can be considered middle-income. There are certain classifications of countries – including those created by the World Bank – but the definitions remain somewhat blurred.

Indeed, some of these criticisms are difficult to dismiss. The examples above show that the relative level of development at which “stagnation” occurs varies significantly between countries. In some cases, it is around 20–25% of U.S. income levels; in others, it is closer to 40%.

Yet there does appear to be a certain ceiling separating wealthy countries from the rest of the world. In 1970, there were roughly 25 countries whose income per person was at least half that of the United States. Since then, another approximately 25 countries have joined this group. However, once tax havens, financial centers and resource-exporting economies are excluded, the number falls to just 15 – ten of which are economies in Central and Eastern Europe.

This group of 15 includes only a handful of large countries, meaning those with populations above 10 million: Taiwan, South Korea, Spain, Poland, Czechia, Turkiye, Malaysia and Romania.

Two paths to breaking through the ceiling

What makes these countries different? I believe the answer lies at the intersection of domestic and external factors. The economic history of these countries reveals two distinct pathways – the Asian and the European.

The first is closer to the traditional school of development economics, which argues that a high rate of capital accumulation is a crucial prerequisite for growth. Very high savings rates are a defining feature of economies such as South Korea and Taiwan. These resources are invested primarily in developing technologies in export-oriented industries. In this way, countries build competitive advantages and secure strong positions in global value chains, ultimately joining the ranks of the world’s most advanced economies.

The second, European path is, in a sense, easier. It relies primarily on attracting foreign capital and then developing technological capabilities by integrating domestic companies into supply chains as suppliers, as well as through imitation. As a result, it does not require maintaining a high savings rate at the expense of current consumption.

For such capital to flow into a country, however, access to a large market is essential. This involves both geographical proximity to the wealthy Western European market and the removal of trade barriers – meaning membership in the European Union. Or at least participation in a customs union, as is the case with Turkiye.

Poland’s path

Poland is therefore not unique, although our economic rise is perhaps the most spectacular among all European countries. We started from a very low base in 1990 and have since become one of the most developed economies in the region. Moreover, the economy is characterized by strong macroeconomic stability – unlike Turkiye, with its rampant inflation, or Romania, which struggles with a twin deficit.

It was not Morawiecki’s Plan that enabled Poland to maintain its pace of development. However, it did include measures that were later implemented and helped support the economy. The most notable was growth driven by wages – namely, a policy of rapidly increasing the minimum wage and, as a consequence, wages across the broader economy. This boosted domestic demand, but it also encouraged many companies to invest in automation and productivity improvements.

On the other hand, this was accompanied by a deep conflict with the EU, the consequences of which are still being felt today, for example in the construction sector. The overall balance is far from clear-cut.

This leaves one final question: given our strong performance, will Poland manage to catch up with the EU average in terms of income? I will quote Geoff Gottlieb, head of the International Monetary Fund mission, who said in an interview with XYZ: “Poland is not large enough to converge without a stronger Europe.” In other words, further development will require even better access to the European market.

Poland has achieved the status of a highly developed economy, despite widespread concerns a decade ago that it could fall into the middle-income trap. Current data shows that the country has already overtaken some Western European economies in terms of income per capita and has a realistic chance of further narrowing the gap.
The very concept of the middle-income trap remains contested among economists. While many countries in Latin America, Asia and Africa have become stuck at a middle level of development, critics argue that there is no single, universal “trap” – rather, there are different development barriers shaped by the specific characteristics of individual economies.
Poland’s success has primarily resulted from integration with the European market, foreign capital inflows and macroeconomic stability, rather than from the implementation of a single development strategy. Some policies, such as wage growth and investment in productivity, supported economic expansion, but further convergence with Europe’s wealthiest countries will depend on the strength of the broader European economy and maintaining close integration with the EU.