THE MIDDLE INCOME TRAP - China and India, what are the chances ?

[Gandhi G in da house]

India and China are growing rapidly today because both are low income countries but there has been a trend in the past in which countries which saw great economic growth rates as low income countries became either slow or stagnant once they reached the middle income stage.

It happened to many latin american countries like brazil which grew rapidly in 1960s and 70s but slowed down majorly in the 80s which has delayed its path to becoming a developed country. Malaysia and Thailand as well are said to have become stuck in this trap.

However some countries have avoided this trap like S.Korea , japan , taiwan , singapore and hong kong.

What are the chances for India and China to get stuck in this dreaded middle income trap ?

This is very important as it can delay India and China 's achievement of developed country status by decades.

 

[Nomenclature]

As you mentioned, S.Korea , Japan , Taiwan , Singapore and Hong Kong all avoided the middle-income trap. In other words, everyone in the Sinosphere managed to avoid the middle-income trap on their paths of development. So I'll be extremely surprised if China somehow manages to get trapped.

 

[Gandhi G in da house]

As you mentioned, S.Korea , Japan , Taiwan , Singapore and Hong Kong all avoided the middle-income trap. In other words, everyone in the Sinosphere managed to avoid the middle-income trap on their paths of development. So I'll be extremely surprised if China somehow manages to get trapped.

Why did the countries in the sinosphere not get trapped ?

What is it that they did differently from Latin american countries and mexico ? Now please dont give me that IQ thing .

 

[Areesh]

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[Chinese-Dragon]

As you mentioned, S.Korea , Japan , Taiwan , Singapore and Hong Kong all avoided the middle-income trap. In other words, everyone in the Sinosphere managed to avoid the middle-income trap on their paths of development. So I'll be extremely surprised if China somehow manages to get trapped.

That's right. China and Hong Kong have a similar development model, so I would be very surprised if China fell into the same trap that Latin America did. Not to mention that all the Hong Kong economic experts are Chinese nationals now, and will be used in the mainland too. Same country remember?

East Asian nations tend to follow a similar economic model, with a lot of emphasis on exports and high levels of government intervention in the early phases. When I go to the mainland (which I often do) I see a lot of similarities between the development of mainland cities and Hong Kong, it seems they will follow the same path.

Look at cities like Shanghai and you will see that mainland cities certainly have the potential to become high-income cities like Hong Kong is now. In fact, I think Shanghai is soon going to surpass HK in terms of overall GDP.

 

[Chinese-Dragon]

India and China are growing rapidly today because both are low income countries but there has been a trend in the past in which countries which saw great economic growth rates as low income countries became either slow or stagnant once they reached the middle income stage.

It happened to many latin american countries like brazil which grew rapidly in 1960s and 70s but slowed down majorly in the 80s which has delayed its path to becoming a developed country. Malaysia and Thailand as well are said to have become stuck in this trap.

However some countries have avoided this trap like S.Korea , japan , taiwan , singapore and hong kong.

Also I think the comparison between East Asian countries and Latin American countries is wrong.

Which Latin American country grew at an average rate of 10% for THREE DECADES in a row? None of them.

Also the economic models are completely different, China's economic model is very similar to the one followed by other East Asian nations, i.e. strong focus on manufacturing, urbanization and FDI.

 

[bigmoneymaker]

well， i have a say in malaysia case....malaysia has some sense of sinosphere but the story goes like this way: during 70s 80s malaysia had good exports and favorable foreign investment, and this boosts economic growth during light industrialization phase. when the people have enjoyed moderate living standards, the ethnic Malay start to red-eyeing on non-bumiputra achievements and impose infamous new economic policies NEP to loot wealth from other hardworking and intelligent races especially ethnic chinese during the critical moment of economic transformation from light manufacturing industry into intellectual led service industry.....and the result of internal struggles and strife caused by insensible distribution of resources is now what you see: middle-class trapped malaysia....atlas, we this generation need to struggle against the menacle of that unfair racial discrimination policy by displaying our maximum values...