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Through analysis of the South African case, a country stalled in a middle income trap, the paper aims to add to the literature on catch-up. It uses Albuquerque’s (2019) model of the vicious cycles arising from inequality and income concentration, together with the notion of ‘upgrading coalitions’ (Doner and Schneider 2016) required to challenge these vicious cycles, to analyse the persistence of lock-ins. It then analyses a global astronomy project, a ‘window of opportunity’ building on historically grown capabilities, promoted by ‘upgrading coalitions’ operating in the national interest. In contrast, it proposes a ‘detour’ to build domestic capabilities, driven by an upgrading coalition centred on local economic development and livelihoods in the informal economy. The paper aims to reinforce the evidence on how inequality is both a cause and consequence of a middle income trap, and open debate on how upgrading coalitions may be a critical strategy for breaking lock-ins.

Catching up, falling behind: the need to build upgrading coalitions for innovation and inclusive development in South Africa