NEW YORK TIMES: … China faces a daunting challenge called the middle-income transition, where developing nations have repeatedly stumbled. Since Japan rebuilt after World War II, only the Asian Tigers — South Korea and Taiwan and the city-states of Singapore and Hong Kong — have made it from middle-income status generating, in today’s dollars, some $10,000 in economic activity per person to high-income status of $20,000 and above.
In the modern era, poor nations have often found that the most effective strategy to jump-start their economies is to specialize in low-wage exports, tapping vast global demand. But the middle-income transition, Dr. Spence argues, requires a much more sophisticated economic policy, with nations gradually moving up the ladder of producing more complex industrial goods, and, importantly, strengthening domestic demand for consumer goods…
The 2011 report (another based on the 2013 discussions will be published) details a host of problems: steadily worsening income inequality and a reduction in the amount of economic activity going to wages from two-thirds of G.D.P. in 1980 to barely half today. It laments an “enormous” three-to-one disparity between urban and rural wages, and worse disparities in health care provision, a fragmented school system and poor social services… (more)
