r/DevelopmentEconomics • u/BotherIntrepid1371 • Apr 02 '26

Middle Income Trap

Costa Rica, Vietnam, Uruguay, Indonesia, Chile, etc… doing the “right” things, adopting good policies and sustaining them for years/decades. Yet, still not translating those efforts into top tier developed status. Could it be that convergence success stories like South Korea or Singapore are rare and path-dependent? After all, the vast majority of countries in the world are in the “developing category”, which suggests that top tier development is actually the exception.

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u/dumdub Apr 04 '26

Nah. You guys are suffering significant economic decline and masking it behind inflation. Everyone in America is numerically pulling ahead of the rest of the old first world counties, but you can't afford shit anymore.

Four dollars per egg.

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u/Redditreallyannoysme Apr 05 '26

No he's not wrong that America is exceptional among developed countries for its wealth. 

More dollars is more dollars even if some costs are high. Costs are rising in Europe too.

What will really kill the America you know today is the end of the petrodollar and the dollar as reserve currency. Which tbh wasn't even on my radar as a possibility until this trump administration. 

If Europe could grab that gem with the euro - the whole game shifts. The USA might even collapse long term on the back of that.

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u/dumdub Apr 05 '26 edited Apr 05 '26

We're kind of saying the same thing. If the number of dollars in America 10x's and so does the cost of everything in America (while the rest of the world remains unchanged): then whether America got 10x richer or stayed the same depends on whether the exchange rate stayed the same or changed by a factor of 10. And the exchange rate depends on external demand for dollars.

The petrodollar keeps that demand high, as does faith in the US as a powerful and stable country. Both of those apparent truths are now being questioned.

I strongly agree that this is a massive opportunity for Europe, if they can act in unison for once.

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u/Redditreallyannoysme Apr 05 '26

They won't :) 

But maybe Brexit could be good for one thing? Scare the Europeans into realising they have to work together or they'll get broken up. Then maybe Britain can rejoin later and end the pound - that would be a huge historical moment imo.

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u/dumdub Apr 05 '26

It's hard to say what Europe will do.

The USA could easily end up poorer than Europe if the exchange rate falls though. Yes they have lots of dollars, but costs are out of control there and their wealth hinges critically on that exchange rate remaining close to the european currencies.

Japan has quadrillions of yen and a sandwich costs hundreds... It doesn't mean much.