An Industrial Transformation Path Across the Middle Income Trap

Abstract

In the history of the development of the world economy, countries such as Japan and South Korea have successfully achieved a leap to high-income economies through a series of industrial transformations at the middle-income level, while Latin American countries are mired in the so-called “middle income trap”. How to become a high-income economy by avoiding the middle income trap is one of the biggest challenges faced by the Chinese economy. Exploring the root causes of the “middle income trap” and the law of leap-forward development can help China accelerate its transformation of the economic development model and achieve sustainable development. From the perspective of industrial transformation and development, this paper compares the successful cases of Japan and South Korea, analyzes typical Latin American and Southeast Asian countries that have stumbled into the “middle income trap”, investigates the logical relationship between the “middle income trap” and industrial division of labor and international industrial transfer, summarizes the international experience, and puts forward countermeasures and suggestions for China’s transformation and development.