Formation And Cross Of The Middle-income Trap

"Middle income trap " was first proposed formally by the World Bank in2007(World Bank,2007b), and its basic meaning is:when a country’s per capita GDP exceeded the "off stage " in the middle-income and is in the process of moving toward＄10,000, it can’t enter the rank of high-income countries for long-term economic stagnancy or stagnation. The reasons may be insufficient economic development independently, endogenous economic growth, lack of motivation, not successfully achieve economic transformation and upgrading, rich-poor divide serious and social conflicts.After more than30years of rapid economic growth, China’s per capita GDP has exceeded the＄6500threshold in2013, in line with international standards into the rank of middle-income countries. Meanwhile, China also experiences a series of problems, such as income distribution gap increases, the extensive economic growth mode, slow optimization and upgrading of industrial structure, low levels of public service, insufficient internal impetus driving economic development, as well as corruption and exacerbated social conflicts. Along with the decline of the marginal efficiency of capital, in the next20years, Asian economies (including China) economic growth will have a larger fall. In such cases, whether China can avoid Latin "middle-income trap" mistakes and smoothly into the ranks of high-income countries, become the focus of domestic and international issues of common concern.Under China’s current economic environment, the imbalance in the distribution of income is an important threat led to fall into the trap of middle income. So what paths do the income distribution affect economic growth? Which is the critical path that China crosses the "middle-income trap"? How can China successfully overcome the middle-income trap? In order to answer these questions, this paper is divided into five chapters.Chapter Ⅰ introduces the research background, literature review and abroad, subject significance, research ideas and methods, contribution and deficiency, and carefully summarizing the research state of middle income trap.Chapter Ⅱ details the "middle income trap" of concepts, that "middle-income trap" problem can be in the big framework of "theory of economic growth ". There are four income distribution mechanisms in economic growth:(1) credit market imperfections model;(2) the political and economic growth model;(3) social unrest model;(4) consumer demand theory. Latin America and other countries into the "middle income trap" also correspond with the actual experience of the mechanism of these effects.Chapter III combs the current "middle income trap" problem that China faces. China income distribution disparities exist mainly at the rural-urban income distribution, interregional income disparities and wage gap between industries. Severe income distribution situation, China’s smooths across the "middle-income trap" face certain challenges. Income distribution is so severe that there are challenges for China to smoothly across the "middle income trap". Meanwhile, the past economic growth momentum has gradually been seriously challenged:(1) government-led investment dividends disappear;(2) the demographic dividend disappeared;(3) the after advantage disappeared;(4) the dividends of globalization disappear;However, the current level of consumption of residents is low, and there is a huge room for improvement consumption rate and a huge potential consumer scale. From the perspective of income distribution, domestic dividends become a key point in the future of China’s economic growth, and demand model is more suitable with the current status of economic development in China. Income distribution through demand to affect China’s smooth across the "middle-income". It is an important conclusion of this paper.Chapter IV is an empirical analysis. It verifies the relationship between income distribution and consumer demand from measure, mainly on the impact of China’s urban income gap on consumer demand. Econometric analysis showed that the expansion of urban income gap is largely reduced the urban consumer demand, which could constrain economic growth. It coincides with the theoretical conclusions in the third chapter.Chapter V concludes the paper. This chapter provides reference for China to across the middle income trap, giving relevant policy implications, and into the ranks of high-income countries as soon as possible.