About the programme

Escaping the Middle-Income Country Trap (EMIT) Integrated Programme

An international research consortium composed of institutes from the Netherlands (Erasmus School of Economics & Rotterdam School of Management), the Philippines (University of the Philippines College of Social Science & Philosophy, UP School of Economics), and Thailand (Asian Institute of Technology), is carrying out an ambitious research programme entitled: ‘ESCAPING THE MIDDLE-INCOME COUNTRY TRAP: targeted and pragmatic policies for technological upgrading and worker-inclusive industrial strategies as drawn from firm-level analysis of the Philippines and Thailand‘.

The integrated programme, which is comprised of six research projects and one pilot project will bring together 13 researchers of 7 nationalities and several stakeholder organizations from business, labour and civil society groups from Thailand and the Philippines. The project is funded by the  Netherlands Organization for Scientific Research (NWO-WOTRO), and will run for  four years beginning April 2011.

Overview

Many developing countries have escaped the poverty trap only to flounder and stagnate upon reaching middle-income. Although globalization is theoretically expected to induce some convergence of incomes, many countries enter the global market squeezed between low-wage competition from poor economies and cutting-edge innovation in technologically-superior countries. These countries tend to produce and trade a narrow range of goods and services, and its entry into the global market entry is highly dependent on buyer-supplier relationships with multinational firms. Obviously, stimulating competitiveness and growth would require greater product diversification and more autonomy for local firms to seek out higher value-added niches in the global production chain. Increased competitiveness, however, should not be at the expense of workers, especially women, and the quality or conditions of their employment. What is needed, therefore, is not only technological, but also social upgrading as basis for sustainable growth. This will likewise serve as fuel for long-term political support for measures and reforms that are essential in facing the increasingly complex challenges posed by globalization.

While the macroeconomic/institutional/infrastructural bottlenecks preventing countries from upgrading to maintain competitiveness have been extensively researched, little is known of micro/firm-level impediments, as well as the factors that allow pockets of success to emerge despite the significant constraints typically plaguing a middle-income economy.

The main goal of the project is to develop and pilot new public-private partnership arrangements / institutions geared towards addressing the middle-income trap. To achieve this, it is crucial for stakeholders to arrive at a common understanding of the MICT phenomenon, thus creating ownership of the problem and facilitating the process of building commitment to implement whatever policies and strategies that are needed to escape the MICT. The Wotro EMIT research projects will therefore be aimed at providing stakeholders with information, knowledge and analysis of the MICT through a comprehensive research on the micro-conditions of export performance, adjustment and upgrading patterns, the organization and governance of global value chains (GVCs), and labour/gender-related adjustment issues.

The 6 research projects in the EMIT integrated program will explore the following propositions:

  1. Countries that are suffering from MICT experience a lack of understanding of the locational decisions of multinational enterprises (global value chain); Countries are in the MICT because of their position in the global value chain.
  2. MNCs firms face difficulties in formulating their strategies towards middle income countries like Thailand and the Philippines.
  3. Firms that are more responsive to workers’ needs are more competitive.
  4. Successful (e.g. productive, innovative, competitive) firms share common characteristics across sectors.
  5. Possibilities of upgrading for local firms depend on the governance structures of the global value chains on which they are operate.
  6. MICT is systemic/ structural problem; getting out of it requires proactive solutions;
  7. New institutional arrangements/solutions, like PPPs, need to be developed to achieve higher growth trajectories.
  8. Labor migration policies directly impact on the competitive position of firms and countries. (subtopic: is there an impact on productivity of workers coming from household with overseas workers; impact on labour participation/ effort)

What is New

The main innovation of the project is the unique combination of analytical/econometric rigour, broad analysis of societal relationships and governance, and strategic and practical reasoning, which could be expected from an active collaboration between economics, sociology, anthropology, and business management. This, coupled with intensive consultation with stakeholders, allows the design of a multi-dimensional firm survey that provides relevant information not only for researchers and government policymakers, but for firms themselves. The research process is also multidirectional, moving from macro (literature survey) to micro through stakeholder consultation and firm surveys, and from a pilot policy-building project (Chains-for-Change) to a more generalisable national industrial strategic policy.

Novel approaches in forging dynamic and innovative private-public-partnerships (PPPs) will be explored in cooperation with the Partnership Resource Centre[1] (PRC).  There is increasing involvement of firms in development partnerships, especially among multinational enterprises, not only as part of their Corporate Social Responsibility (CSR) initiatives, but also as part of their internationalisation strategies and effective management of their global value chains.  The role of business in achieving developmental goals is increasingly becoming recognized, particularly in the manner in which poverty reduction can be linked to entrepreneurship, more innovative means of transferring knowledge to local firms especially SMEs, and generating collective or public goods that address the constraints that raise the cost of production in middle-income economies.  One key innovation of the project is therefore the emphasis placed on the active involvement of private firms and the need to balance the roles of government, civil society and business in this partnership for development.


[1] This is a joint effort between a number of Dutch universities, the Dutch government, and (international) NGOs and firms.  Its administrative seat is located at the Rotterdam School of Management.

EMIT Roadmap

The EMIT programme has 2 pillars: one is the PPP project to be initiated in Calabarzon, called the Chains-for-Change (C4C) Pilot Project,  and the other is Research, which will be based on a national firm survey in the Philippines and firm-labour surveys and case-studies on Calabarzon and Bangkok. Preliminary results are targeted to be presented at the end of 2014 and in November 2015, the final results of the 6 projects will be presented in the two conferences in the Philippines and Thailand. High-level policy dialogues in both countries will be organized at the end of the project as well.

The Stakeholders and their Role

Stakeholders[1], with their knowledge and experience, are key actors in the programme, and therefore, considerable effort will be made to draw their engagement in all phases of the project, from its inception to the sharing of the emerging results.   Since the ultimate goal of the programme is to stimulate private-public partnerships in identifying and implementing pragmatic strategies to escape from the middle-income country trap, it is essential that stakeholders, with the aid of scientific research, first arrive at a common understanding of the challenges at hand.  And towards the end of the project, it is hoped that the stakeholders together with the researchers will be able to communicate a unified and coherent set of solutions to key private and public policymakers in both countries.


[1] “A stakeholder is any individual, community, group or organisation with an interest in the outcome of a programme, either as a result of being affected by it positively or negatively, or by being able to influence the activity in a positive or negative way.” (DfiD 2003:15)

Learn more about the stakeholders

The Team

The EMIT team is composed of 14 researchers from the Netherlands, Philippines and Thailand.  They cut across various disciplines such as economics, business management, sociology and anthropology.  The team is led by Prof. dr. Cynthia Bautista from UP-CSSP and Prof. dr. Jean Marie Viaene from EUR.  Dr. Annette Pelkmans-Balaoing is the overall project coordinator.

More information on the team members