UPSC Prelims 2017 CSAT Paper II · Q44 of 79 Comprehension medium

Passage

The IMF has pointed out that the fast growing economies of Asia face the risk of falling into 'middle-income trap'. It means that average incomes in these countries, which till now have been growing rapidly, will stop growing beyond a point—a point that is well short of incomes in the developed West. The IMF identifies a number of causes of middle-income trap—none of which is surprising—from infrastructure to weak institutions, to less than favourable macroeconomic conditions. But the broad, overall cause, says IMF, is a collapse in the growth of productivity.

Which among the following is the most logical, rational and critical inference that can be made from the above passage?

  1. (a) Once a country reaches middle-income stage, it runs the risk of falling productivity which leads to stagnant incomes. ✓ UPSC's answer
  2. (b) Falling into middle-income trap is a general characteristic of fast growing economies.
  3. (c) There is no hope at all for emerging Asian economies to sustain the growth momentum.
  4. (d) As regards growth of productivity, the performance of Asian economies is not satisfactory.

Why the answer is (a)

• The passage explicitly states that the broad, overall cause of the middle-income trap is a 'collapse in the growth of productivity'.

• It defines the trap as a situation where average incomes, which were growing rapidly, stop growing beyond a certain point.

• Therefore, the logical inference is that reaching the middle-income stage involves a risk where productivity growth collapses, leading to stagnant incomes.

• This aligns directly with option (a), which links the middle-income stage to the risk of falling productivity and subsequent income stagnation.

Why the other options are wrong

(b) Falling into middle-income trap is a general characteristic of fast growing economies.
The passage identifies the middle-income trap as a 'risk' for fast-growing economies, not as a 'general characteristic' or inevitable outcome.
(c) There is no hope at all for emerging Asian economies to sustain the growth momentum.
The passage discusses a specific risk and its causes, implying that the issue is addressable, rather than stating there is 'no hope at all' for these economies.
(d) As regards growth of productivity, the performance of Asian economies is not satisfactory.
The passage describes a potential future risk of productivity collapse, not a current assessment that the performance of Asian economies is already 'not satisfactory'.

Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2017, held on 18 June 2017. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

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