1. Review of Kotlewski and Błażej “…Middle-Income Trap...”
Barbara M. Fraumeni
China Center for Human Capital and Labor Market Research
Central University of Finance and Economics, Beijing, China
CEFMS, Hunan University, Changsha, China
National Bureau of Economic Research, Cambridge, MA USA
IZA, Bonn, Germany

2. Recasting the Paper
Question is really whether countries that have been undergoing a transition to a more market centered economy will prosper to a greater extent in the future
The NACE 2 sectors which are experiencing negative MFP contributions are those which are experiencing sovereign led or supported capital investment or are under strong public control

3. Drag of Restructuring or Modernizing
These sectors include mining, electric and water, transportation, and the arts
The other covered sectors covered in this paper: trade, accommodation and food, construction, finance, ICT, other services, professional and administrative, and manufacturing all have positive MFP contributions
Good news, market economy is doing better than all Poland by

4. Results Presentation Results are presented for 2005-15 and 2010-2015.
Perhaps this was to avoid a recession period, but subperiods could be chosen to isolate such a period
Contributions are the sum of contributions across the years show, not the average contribution per year

5. Results Presentation
This makes it difficult to compare to the whole period,
Doing an approximate adjustment (5 vs. 15 years), manufacturing (which accounts for about a quarter of Polish economic activity) is doing worse in than in the overall period
However, sectors representing the move towards a service driven economy (accommodation and food? and other services) are doing better in than earlier, as is ICT

6. MFP So Important
Very little going on except for MFP and non-ICT capital
Often labor composition (quality) does not show up as all that important
Note that there is a negative contribution of labor composition (quality) for and for ICT

7. Barro-Lee, vs and 2010
As is common for countries with high levels of education, year old females are more highly educated than males
Reverse is true for those 55-64
Between 2005 and 2010, the average years of school for both males and females of these ages went up by about 4 percent
Younger females about half a year less educated than US females (Poland 13.4)
Younger males about .8 of a year less educated than US males (Poland 12.7)

8. Results Presentation
Statistics should be presented as yearly averages for an easier comparison

9. Other Presentations
Decompose contributions into labor productivity vs. MFP to show capital deepening:
ln(V(t)/L(t))-ln((V(t-1)/L(t-1)) =
vK(t)*[ln(K(t)/L(t)) - ln(K(t-1)/L(t-1))]
+ ln(MFP(t)) - ln(MFP(t-1)),
where “v” represents the average nominal capital share. This expression can be rewritten with labor quality and two types of capital input using the expression in footnote 13 of Oliner & Sichel (Fall 2000 Journal of Economic Perspectives)

10. Other Presentations More Ambitious
An econometric model similar to Jorgenson-Gollop-Fraumeni (1987) to estimate whether MFP is capital (ICT or other) or labor using
However, an econometric translog model may reduce to a Cobb-Douglas

11. Back to Middle Income
“If the economic growth is innovation or at least imitation driven, not investment driven, in the fast growing industries of the market economy, the outcome in the form of the middle-income trap will not coalesce.”
“…if industries that can be considered as growth supporting engines in the economy are mainly multifactor productivity (MFP) contribution driven, not capital contribution driven, and further if that multifactor productivity contribution is decisive for their ranking in the relative speed of growth, then the process called the middle-income trap is very unlikely to materialize itself.”

12. Middle Income Literature
Maybe a table to summarize what the literature says about the middle income trap

13. Bottom Line
Results seem reasonable, however, I do not have much to go on.
Middle income analysis is difficult given the market transition that is still going on