ABSTRACT
Unlike low-income countries that are struggling to overcome economic stagnation, middle-income countries (defined as those with real per capita incomes between US$3,036 and US$9,385) would appear to be proceeding well along the development path. But historically, sustained and balanced growth is relatively rare1: policymaking is fragile in many middle-income countries such as Argentina and Turkey. And the progress of countries that consistently adopt sound policies is often interrupted by shocks in their terms of trade and/or capital flows. The 1997 crisis showed both the vulnerability of countries, such Korea and Indonesia, that have decades of impressive progress and the difficulties of getting assistance from multilateral banks after an extended absence: the Bank’s knowledge of Korea was outdated, and even in Thailand, many affected sectors were poorly understood.
