Surpass The Middle-income Trap

When the conception of "Middle-income Trap" was first proposed by the World Bank, it has gained much attention. Economists from different countries conducted many in-depth studies over the issue to find a way to avoid the "Middle-income Trap". After a continuous rapid economic growth ever since the beginning of Reform and Opening-up Policy, China’s GNI per capita has reached4240dollars, which makes China an up-middle income country. But a variety of economic and social problems has appeared during the speedy growth period, which makes some scholars believe that China has the possibility of falling into the trap."Middle-income Trap" is not only about the slow down or staged economic growth rate but also indicates a complex problem of all aspects of the region. A low level of income is a result but not a reason of "Middle-income Trap". We may gain a sustainable growth if successfully surpass the trap. Urban is a growth pole of one region, the level of urban development to some extent determines the competitiveness of the region. A comprehensive level of urbanization reveals the level of economic growth, infrastructure, convenience and livelihood of the city. Appropriate measures should be taken to avoid falling into the "Middle-income Trap"This paper makes an overview on the related thesis about "Middle-income Trap", analyzes the features and causes of "Middle-income Trap" and further clarifies the links between urbanization and "Middle-income Trap". As an important province in the middle China, Hunan had a very impressive performance in economic growth. But still, a lot problem appeared during the development period. The trace of the development of Hunan province makes it an epitome of China’s development. Based on the economic and social data related to the comprehensive urbanization from the year of1978to2012of Hunan province, this paper builds an urbanization indicator system to indicate the real urbanization level of Hunan. This paper uses a factor analysis method to make an accurate evaluation of urbanization level of Hunan Province. Then this paper turns to an empirical study with a VAR model. The results show that the comprehensive urbanization level has a gradually increased positive effect on economic growth. Then this paper turns to an analysis on the relationship between comprehensive urbanization level and social factors, we find that the highly comprehensive urbanization level is the social factors shows a more positive effect on economies. Based on the analysis made in the paper, this paper gives policy suggestions on how to surpass the "Middle-income Trap" from an comprehensive urbanization perspective.