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Theoretical And Empirical Research On How Product Space Structure Affects Middle-Income Trap

Posted on:2019-06-06Degree:MasterType:Thesis
Country:ChinaCandidate:H X JiaFull Text:PDF
GTID:2429330548474227Subject:International trade
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Many economies around the world have reached the middle-income level since the 1950's.After their initial rapid growth,some countries(including regions)have lost the engine of sustained growth and have long been trapped in the middle-income phase,a phenomenon known as the "middle-income trap(MIT)".Since the World Bank first referred to this concept in the study entitled "East Asian Renaissance-ideas for economic growth" in 2007,the academia has paid wide attention to this issue.After Hausmann and Klinger(2007)creatively put forward the product space theory,perspectives of researching the middle-income trap is further expanded.However,the present research lacks an appropriate transition from the characteristics of the product space to the economic growth of middle-income countries.The literature on thorough theoretical models and comprehensive empirical analyses is relatively few.Therefore,in order to explain the MIT,it is of theoretical and practical significance to study the characteristics and the evolution paths of the product space in middle-income countries.Based on the concept of MIT,this paper first defines what a middle-income trap is,and then examines the possibility of economic slowdown,which naturally leads to analyze the challenges China is facing during the upper-middle income phase.Combined with the basic connotation of product space theory,this paper further constructs a theoretical framework to explain the economic growth of middle-income countries from the perspective of the product space structure,i.e.the product space conditions the evolution of comparative advantages,the improvement of capability regulates the pattern of industrial upgrading,and the ability of product transformation impacts the risk of being trapped in MIT.Using the trade data of 625 kinds of products in 144 countries from 1962 to 2014,the empirical research shows that the capability of product transformation measured by the complex outlook index(COI)significantly affects the possibility of a country falling into the lower-middle and the upper-middle income trap.The greater the ability of a country to transform into complex products,the more likely it is to cross the middle-income trap.Meanwhile,the regression of a panel data model shows that the improvement of product transformation ability can significantly promote the economic growth of low-income,lower-middle income and upper-middle income countries.In addition,this paper plots the product space configurations in 1980,2000 and 2014.The evolution process of the product space in the Philippines,Brazil and Japan suggests that how advanced the product space structure is accords with how developed the economy is.Less developed economies tend to have few advantages over capital or technology-intensive products,which means the industrial upgrading process could be painfully slow.Finally,based on China's national conditions,this paper puts forward four pieces of policy suggestion on improving the product space structure as a guide for China to smoothly cross the upper-middle income stage:improving the industrial exit mechanism and alerting the risk of being locked in current comparative advantages;promoting systematic innovation and focusing on cultivating key technologies and general capabilities;motivating enterprises and consumers and exploring the new advantages in capital and market;adjusting to the integration trend and promoting the servitization of manufacturing industry.
Keywords/Search Tags:Structure of the product space, Middle income trap, Capability of product transformation, Industrial upgrading
PDF Full Text Request
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