The Measurement And Analysis On Middle-income Trap In China

The word “middle-income trap” derives from The Economic Recovery of East Asia reported by World Bank in 2007, which is used to describe a state in which the economic growth of a country or a region slowed down or stopped after it entered into the rank of middle-income country, making it hard to rank into the high-income list accompanied by a series of economic and social problems. Since 2002, our country has been in the rank of middle-income list over 10 years, during which economic growth rate slowed down and GDP growth rate reduced to about 7%. Besides, some social problems came in succession, such as the widen income gap and severe corruption. In a word, it is worthy to study whether our country has sunk into the middle-income trap.This article mainly solves the following questions: First, expounding the definition of the middle-income trap; Second, making descriptive analysis to our country based on the characteristics of middle-income trap; Third, based on the characteristics, establishing middle-income trap evaluation index system, and the entropy weight method is adopted to measure our country; Four, evaluating whether or not our country has felt into the middle-income trap by comparing with the typical middle-income trap countries.First of all, the paper explains the meaning of middle-income trap from the surface and deep level. The surface is a stable equilibrium state that the income level is at the middle stage for a long time and difficult to rise to a higher stage, which belongs to the category of economic growth. The deep refers that because of problems such as economic slowdown, unfair distribution, excessive urbanization, lacking of public services, rising unemployment, etc, economy stagnates for a long time, which belongs to the category of economic development.Second, establishing evaluation system based on the characteristics of middle-income trap, including economic growth slowing down or stagnation, democratic chaos, larger gap between rich and poor, serious corruption, excessive urbanization, shortage of social and public services, employment difficulty, social unrest, loss of faith, fragile financial system. There are 11 indicators in the evaluation system, including GDP growth rate, coefficient of corruption perceptions index, the gini coefficient, urbanization, etc. By collecting data from various databases and using the entropy weight method to calculate the weight, the author measures the problems of the middle-income trap in our country.Again, the paper chooses the typical middle-income trap countries, including Brazil, Colombia and Mexico. Calculating the average of each index in these countries respectively and taking this as standard to measure the middle-income trap in our country, compares the comprehensive values and average value of each single index with our country respectively.The conclusions includes: first, comprehensive values reflect that our country has not yet been in the middle-income trap; Second, average value of each single index reflects the fact that when crossing the middle-income trap our country face with challenges in unfair distribution, corruption, social and public services, employment, fragile financial system.In this paper, there are some innovations in the perspective and method. Perspective innovation mainly manifests in the quantitative analysis and not only focusing on economic growth but establishing index system to make comprehensive evaluation. Method Innovation lies in taking each indicator’s average value in typical middle-income trap countries as the evaluation standard to evaluate whether our country falls into the middle-income trap and found the problems needed to pay close attention to in our country.