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Middle Income Countries and Multilateral Development Banks Traps on the Way to Graduation

Otaviano Canuto , Matheus Cavallari , Tiago Ribeiro dos Santos | July 19, 2019

Multilateral Development Banks (MDBs) have two financing windows, with different terms, dedicated to low- and middle-income countries. Countries are presumed to cross those windows as their income per capita rises, with middle-income countries (MICs) eventually “graduating” to a non-client status once they reach some criteria. However, due to what may be called “middle-income traps”, such progression toward graduation has been limited to a small number of countries.