One of the debates about China that I expect will gain more prominence this year will be if China is going to fall into the middle income trap. For those unfamiliar with the term, it was coined by Indermit Gill and Homi Kharas in 2007 in a World Bank paper and describes the observation that GDP growth drops rapidly for some countries, once they have achieved a GDP per capita around $10,000 to $15,000 in today’s money. Classic examples for countries that have been caught in the middle income trap are Argentina, Brazil or South Africa, all of which seem unable to catch up with high income countries despite significant natural resources, increased integration in the global economy and rising human capital due to improving education.
China, Coronavirus and the middle income trap
China, Coronavirus and the middle income trap
China, Coronavirus and the middle income trap
One of the debates about China that I expect will gain more prominence this year will be if China is going to fall into the middle income trap. For those unfamiliar with the term, it was coined by Indermit Gill and Homi Kharas in 2007 in a World Bank paper and describes the observation that GDP growth drops rapidly for some countries, once they have achieved a GDP per capita around $10,000 to $15,000 in today’s money. Classic examples for countries that have been caught in the middle income trap are Argentina, Brazil or South Africa, all of which seem unable to catch up with high income countries despite significant natural resources, increased integration in the global economy and rising human capital due to improving education.