The Mechanism Of Middle-income Trap And The Path To Skip It

After the World Bank put forward the meaning of the middle-income trap in 2006,a question of how those developing countries reach a sustainable development path and skip the phase of the middle-income trap in the period of middle income has been discussed by many economists.China has stepped into the period of middle income and with its GDP per capita reached 8028 US dollars in 2015,China is still in the period of middle income.Relying on its resources endowments,China has made a great accomplishment,but many social and economic problems has occurred and the growth rate will still decrease in the next long period,which will force China fall into the whirl of middle-income trap.So figuring out the mechanism of middle-income trap is important for China to reach the sustainable growth in the trap of middle income.Based on the choice of the path of industrial upgrading,this thesis analyzes the mechanism of how the middle-income trap works and how to skip it.Firstly,by reading and summarizing the literature of industrial upgrading,this thesis gave two paths how it happened:one is progressive upgrading based on the theory of comparative advantages,the other is revolutionary upgrading not based on the theory of comparative advantages.According to those two paths,this paper gives the characteristics of middle income countries in the product space,and explains how the progressive upgrading influences the stagnant of of middle income countries and demonstrates the mechanism of how revolutionary upgrading helps those countries in the middle-income trap.Secondly,using SITC REV.2 three-number classification standard(299 types)and Lall's technology classification,choosing 91 economic entities' commodity trade data in the database of UN COMTRADE from 1996-2015,this paper picks 10 countries as samples of those countries which "in" and "leaving" the middle-income trap,and gives the phenomenon that those countries which are trapped in middle-income trap has two traits:comparative advantage suspension and difficulty of exiting the comparative advantage industry because of following the theory of comparative advantages.Further more,this paper analyzes China's export commodities' comparative advantages and technology structure.Then,according to the complementarity of commodity upgrading and initial ability endowment,add proximity,path,density and product dynamic change in product space,this paper builds a fixed effect type of path of upgrading affects the comparative advantage.By using OLS,make the empirical test of two kinds of countries above.The results are:those countries which are sucked in the trap are more likely rely on its accumulative ability endowments,and follow the progressive path;but those countries which are successfully get rid of trap and into the rank of high income follow the revolutionary path,which means the "creative destruction".And China's path is more difficult,one side is subtly walk away from the comparative advantage,the other side is hard to exit from path of the comparative advantage.