‘Late Converger Stall’ refers to the phenomenon wherein a low-income country that hopes to grow into a middle or high-income country, after witnessing a period of high economic growth, fails to achieve its goal. Instead, it gets trapped in its lower income status due to various reasons. Rapid growth witnessed by such countries turns out to be the result of favourable economic conditions and hides the structural weaknesses in those economies.
Resource-rich economies generally witness high growth during periods of increasing commodity prices, which in turn leads to hopes of sustained economic growth. Such hopes come crashing down after commodity prices fall.
India needs to take on four challenges in order to ward off the fears of an impending “Late Converger Stall” in the process of economic development. The four challenges that the Survey points to include: the backlash against globalization which reduces exporting opportunities, the difficulties of transferring resources from low productivity to higher productivity sectors (structural transformation), the challenge of upgrading human capital to the demands of a technology-intensive workplace, and coping with climate change-induced agriculture stress.
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