Finding a Way to Avoid the Middle-Income Trap: The Cases of China and Peru

468 Pages·2021·23.988 MB·English

by  Zhang, Y., and Santa Gadea, R. (eds)

图书在版编目（CIP）数据
寻找避免“中等收入陷阱”的方法：以中国和秘鲁为例=Finding a Way to Avoid
the Middle-Income Trap: The Cases of China and Peru：英文/张宇燕，罗萨里奥·圣
加德亚主编.—北京：中国社会科学出版社，2021.10
ISBN 978-7-5203-8876-4
Ⅰ.①寻… Ⅱ.①张…②罗… Ⅲ.①中国经济—经济发展—研究—英文②经济发展—
研究—秘鲁—英文 Ⅳ.①F124②F177.84
中国版本图书馆CIP数据核字（2021）第188774号
出版人 赵剑英
策划编辑 白天舒
责任编辑 夏侠
责任校对 沈丁晨
责任印制 王超
数字编辑 于晓伦
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版次 2021年10月第1版
印次 2021年10月第1次印刷
开本 650×960 1/16
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字数 451千字
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目录
Preface
Chapter 1 What Is the Real Middle-Income Trap?
I. Introduction
II. Inevitable Decline in Growth
III. The Specious Trap
IV. Definition of Middle-Income Trap
V. How Big is the Middle-Income Trap?
VI. Conclusion
References
List of Abbreviations
Chapter 2 The Middle-Income Trap in Selected Literature: An Overview
I. Introduction
II. Definitions of Middle-Income Countries
III. Approaches to the Middle-Income Trap
IV. Main Driving Forces of the Middle-Income Trap
V. Components of a Strategy to Avoid Being Trapped
VI. Concluding Remarks
References
List of Abbreviations
Chapter 3 Economic Transition in China and Middle-Income Trap
I. Introduction
II. A Brief Review of Chinese Economy from 1950s to Now
III. Literature Review of Economic Transition
IV. A Zoom in of the Structural Change and Income Growth Pattern in the
Last 20 Years
V. Discussion on Income Distribution and Policy Enlightenment
VI. Conclusions
References
List of Abbreviations
Chapter 4 Transition and the Middle-Income Trap in Peru: A Long Term
Perspective Since the Late 19th Century
I. Introduction
II. Context and Research Questions
III. International Economic Transition: Employment and Output
IV. Data and Methodology
V. Conclusions and Recommendations
References
List of Abbreviations
Chapter 5 China and the World: The Background and Economic Logic of China’s
Opening-UP
I. Introduction
II. Domestic Undercurrent for the Reform and Opening-Up of China
III. Changes in the Outside World
IV. The Theoretical Logic of Opening-Up to the Outside World
V. Conclusion
References
List of Abbreviations
Chapter 6 Peru’s Opening-Up: Strategies, Impacts and Pending Tasks
I. Introduction
II. How Is Economic Openness Defined?
III. The Nineties and Commercial and Financial Openness
IV. The Mining Boom and the 2008 Global Financial Crisis: 2001-2010
V. Free Trade Agreements
VI. The Slowdown, 2011-2016
VII. The Chinese Connection
VIII. The National Program for Productive Diversification
IX. Pending Agenda and Recommendations
References
List of Abbreviations
Chapter 7 Escaping the Middle-Income Trap in China: A Regional Perspective
I. Introduction
II. Regional Harmonious Development and Path Choice for Crossing the
Middle-Income Trap
III. Promoting Human Capital and the Leading Role of Big Cities and
Metropolitan Areas
IV. Contradictions and Effects of Coordinated Development of Regional
Economy
V. Prospects and Policy Implications
References
List of Abbreviations
Chapter 8 Regional Development in Peru: Trends and Challenges
I. Introduction
II. Recent Trends in Regional Economic Performance in Peru
III. Recent Patterns in Internal Labor Migration
IV. Income and Inequality of Access to Infrastructure
V. The Distribution of Human Capital in Peru
VI. Concluding Remarks
References
Appendixes
List of Abbreviations
Chapter 9 Infrastructure Investment Challenges in Emerging Economies and
Solutions of China
I. Introduction
II. Investment Demand, Practical Investment and Output of Infrastructure
Sector in Emerging Economies (Leaping over Middle-Income Trap)
III. Experience of Chinese Infrastructure Investment
IV. Conclusions and Lessons from China’s Infrastructure Investment
References
List of Abbreviations
Chapter 10 The Gap in Infrastructure Investment in Peru and Challenges Ahead
I. Introduction
II. Infrastructure Investments
III. Peruvian Deficit
IV. Challenges
V. Conclusions and Recommendations
References
List of Abbreviations
Chapter 11 China’s Economic Policy Framework to Deal with the Middle-Income
Trap
I. Introduction
II. Fading Away of Two Conditions: The Demographic and Globalization
Dividends
III. Release Human Capital Dividend through Comprehensive Opening-Up
IV. A Liberalized Financial System to Support the “Real Economy”: the
“Middle Way” to Reform?
V. From Technological Imitation to Innovation
VI. Improve the Domestic Business Environment and Investment Environment
through Further Opening-Up
VII. Preventing the Opening-Up from Becoming a Short-Term Control Tool
VIII. Conclusion: from Strong Growth to Sustainable Development
References
List of Abbreviations
Chapter 12 Informality in Peru and Its Effects on Innovation at Firm Level
I. Introduction
II. Theoretical Background
III. Hypotheses
IV. Method
V. Results and Discussion
VI. Conclusions and Recommendations
VII. Future Research Suggestions
References
Appendixes
List of Abbreviations
Chapter 13 Financial Crisis and the Middle-Income Trap: Implications for China
I. Introduction
II. The Middle-Income Trap Stems from Economic Instability
III. The Economic Instability of Middle-Income Economies Mainly Stems from
Financial Crises
IV. Why do Middle-Income Economies Frequently Experience Financial Crises?
V. The Key to Avoiding the Middle-Income Trap Is to Prevent Financial
Crises
VI. Conclusions: Will China Have a Financial Crisis in the Near Future?
References
List of Abbreviations
Chapter 14 Concluding Chapter-Overleaping the Middle-Income Trap: A Chinese
Perspective
I. Introduction
II. Sample Selection and Facts
III. Experience and Facts
IV. Conclusions and Enlightenment
References
List of Abbreviations
Chapter 15 Concluding Chapter-Peruvian Perspective: The Middle-Income Trap or
the Challenges of Development. A Comparative Approach of China and Peru
I. Introduction
II. The Concept of the Middle-Income Trap: Comparative View
III. The Economic Transition in China and Peru: Comparative Perspective
IV. Chinese and Peruvian Opening-Up: Different Challenges
V. Regional Development, Inequality and Human Capital: Coincidences and
Differences between China and Peru
VI. Infrastructure Investment: Achievements of China, Gap in Peru and
Challenges Ahead
VII. Two Different Realities: Fostering Innovation in China and the Impact
of Informality in Peru
VIII. Final Remarks: Looking at China’s Future Transformation and Peru’s
Pending Agenda
References
List of Abbreviations
About the Authors
Preface
This book is the result of close collaboration between the Institute of
World Economics and Politics of the Chinese Academy of Social Sciences (IWEP,
CASS), Beijing and the Center for China and Asia-Pacific Studies of
Universidad del Pacífico, Lima, initiated in 2015 when Dr. Zhang Yuyan,
Director of the Institute and Dr. Rosario Santa Gadea, Director of the Center,
met for the first time at the Beijing headquarters of the former. In April
2016, both institutions organized a Think-tank 20 (T20) workshop in Lima and
agreed to deepen their collaboration through a joint research project.
In August 2016, Dr. Santa Gadea made a visit to IWEP, CASS in order to
have meetings with Dr. Zhang and his colleagues so as to start designing the
joint project. Given its importance, both for China and Latin America, Dr.
Zhang suggested addressing the topic on how to avoid the middle-income trap.
They agreed that this approach is of great importance for economic and social
development. Moreover, they recognized that the exchanges of ideas among
Chinese and Peruvian scholars would contribute to mutual understanding and
enrich the perspective of its challenges and strategies.
During the period from 2017 to 2018, both institutions constructed an
initial agenda for the research. The scope was adjusted to study the case of
Peru, with an acknowledgement of the diversity within Latin America. What is
more, Universidad del Pacífico provided the Peruvian expertise which is useful
for this case study. The title of Finding a Way to Avoid the Middle-Income
Trap: the Cases of China and Peru was then settled upon.
Overall, there are 22 scholars from both sides participating in the
writing of this book. Nine scholars are from China, including six from IWEP,
CASS as well as three others from Shanghai Jiao Tong University, Shanghai
University of International Business and Economics, and Xiamen University. For
the part of Universidad del Pacífico, thirteen scholars from the academic
departments of Economics and Management, the Research Center, and the Center
for China and Asia-Pacific Studies. Such extensive participation made this
project a complex enterprise, in terms of its coordination and the effort
required for coherence over the years.
One important step was the intermediate workshop in Lima, held at
Universidad del Pacífico on November 25th and 26th, 2019, with the
participation of almost all authors. The drafts of all the chapters were
discussed. Each author alternated as presenter and discussant of the different
chapters, and the group had a general discussion about the coherence of the
study, the linkages between chapters, and the preliminary conclusions. What is
more, Chinese and Peruvian authors shared not only their paperwork but also
their friendly personnel contacts.
The research phase was from 2019 to 2020, although some chapters have
undergone the final adjustments in 2021. The final concluding chapters and the
editing process were carried out partly in 2020 and 2021. Our research is
organized into 15 chapters and the topics have been dealt with mostly in the
form of “comparative pairs,” which means that, for each of the different
topics, there is one chapter about China and another one about Peru.
Furthermore, some topics are analyzed across two chapters.
First of all, the book presents the existing theoretical knowledge and the
discussion around the question of the middle-income trap. This first part of
the study is composed of Chapter 1, by Yao Zhizhong, discussing what the
“real” middle-income trap is; and Chapter 2, by Rosario Santa Gadea, Leolino
Dourado, and Gabriel Arrieta, presenting an overview, based on a selection of
the existing literature, of definitions, approaches, driving forces, and
strategies to avoid the middle-income trap. These two chapters provide a
global framework to the questions discussed in the book. While Chapter 1
pointed out the notion of a “growth trap,” Chapter 2 underlined “the
productivity challenge” as the most important driver of the trap. The reader
will find complementary conceptual discussions in Chapter 13, authored by Yao
Zhizhong, about the financial crisis and the middle-income trap.
The transition process is crucial for understanding Chinese and Peruvian
economies, their specific bottlenecks, and their eventual common challenges.
The second part of the study is Chapter 3 by Song Jin, reviewing the
development process of the Chinese economy, especially the industrial pattern
since 1995 and the main contributors of income growth across different
periods. In turn, Chapter 4 by María Amparo Cruz Saco, Miriam Gil, and Favio
Leiva analyzes the economic transition in Peru based on a long-term
perspective starting from the late 19th century. They argue that the middle-
income trap concept may require reinterpretation when applied to a Latin
American extractive economy, such as Peru, that did not go through the Asian
model of export manufacturing growth, as China did.
The industrial transformation and the opening-up of the two economies are
two aspects of the same process. The former mainly occurs domestically, while
the latter links the internal economy with globalization. That is why the
third part of the study deals with the opening-up process. Chapter 5 by Zhang
Yuyan and Feng Weijiang examines the background and economic logic of China´s
opening-up since 1978, which marked the beginning of the economic reforms and
opening-up process in China. This view could be complemented by Chapter 11,
authored by Xu Qiyuan, which explores the challenges of the Chinese
integration into the world economy. Concerning Peru, Chapter 6, by Carlos
Parodi, analyses the opening-up of the economy, focusing on the 1990s when a
series of structural reforms took place in the Peruvian economy based on the
free market and integration into the world economy. The same chapter also
examines the strategies implemented, their impacts, and the pending tasks.
The fourth part of the study deals with regional development and the topic
of human capital. Chapter 7 by Lu Ming states that in a large country such as
China, overcoming the middle-income trap is essentially a problem of
increasing income of residents in underdeveloped inland areas. He proposes
several strategies to attain harmonious regional development in order to
escape a potential trap. For Peru, Chapter 8 by Gustavo Yamada and Julio
Aguirre provides a broad scope of trends in regional development that is
focused on the evolution of labor, migration, and human capital. They point
out the low level and insufficient quality of investments in physical and
human capital nationwide. Both chapters emphasize the importance of raising
the level of urbanization to promote balanced regional development and
investing in human capital as a key variable for avoiding the middle-income
trap at a regional level.
The fifth part of the study refers to infrastructure investment,
especially its positive influence on productivity and economic growth. The
contrast between China and Peru is huge in this respect. Chapter 9 by Huang
Meibo and Wu Lingfang shows the scale and performance of investments in
infrastructure in China, highlighting the government’s role in long-term
planning and financing of investments, and the risks and shortcomings in the
long run. Chapter 10 by Roberto Urrunaga and José Luis Bonifaz estimates the
gap in infrastructure investment in Peru, and notes that the level of
infrastructure is below what might be expected given Peru´s per capita GDP, in
contrast with China. In this topic, Chapter 9 considers that the Chinese
experience can be a benchmark for other emerging economies, such as Peru.
The sixth part of the study focuses on innovation as a means of improving
productivity and upgrading industries. The existing literature underlines that
promoting home-grown innovation is fundamental. This is precisely the point
raised in Chapter 11, in which Xu Qiyuan points out that China needs to change
from technological imitation to innovation, which will lead the country to
innovation dividend. According to the chapter, innovation is definitely a key
framework to deal with the middle-income trap. Concerning Peru, Chapter 12 by
Alejandro Flores and Jorge Heredia proposes a new approach of innovation
considering the huge influence of informality in emerging markets, such as
Peru. The authors develop a conceptual framework and provide evidence about
the extent of informal practices of formal firms in Peru, which discourage
innovation activities.
The two concluding chapters provide a Chinese and a Peruvian perspectives.
Chapter 14 by Zhang Yuyan and Jia Zhongzheng, entitled Overleaping the Middle-
Income Trap: A Chinese Perspective is based on a sample including ten
countries, divided into two groups: the leaping-over group and the lagging-
behind group. Based on quantifiable economic and social indicators, the
authors explore possible paths to overleap the middle-income trap. They
consider that maintaining sustainable, relatively strong, and high-quality
economic development is an inevitable choice for a country to successfully
overleap the middle-income trap, and should take into account a relatively
fast economic growth rate, good macroeconomic conditions, consolidation of the
manufacturing industry, improvement in the quality of human capital,
construction of an innovative country, high-quality and high-level opening-up,
a reasonable fiscal deficit, and offsetting the negative effects of aging
population. Institutional conditions are also very important, and include
enhancing government efficiency, strict combatting of corruption, and avoiding
welfare populism.
The concluding chapter from the Peruvian perspective is Chapter 15 by
Rosario Santa Gadea, entitled The Middle-Income Trap or the Challenges of
Development. A Comparative Approach of China and Peru. It summarizes and
compares the key ideas from the Chinese and Peruvian cases in the different
topics covered by this book, such as the main driving forces of a potential
trap in each case; the common challenges and the main differences in the
economic transitions; the different issues faced as a result of the opening-up
of China and Peru; the differences and coincidences between their respective
regional development processes and the key role of human capital in avoiding
the middle-income trap at regional level; the importance of infrastructure
investments; and the role of innovation for China’s future growth versus the
limitations that informality places on the capacity of formal firms to
innovate in Peru. The challenges related to productivity and competitiveness,
which China has overcome already for the most part, are still highly relevant
for Peru in its path towards economic development. On this basis, this
concluding chapter ends by exploring new pathways for the future of China-Peru
relations.
The book offers a comparative approach, but it is also valuable for
different readers: those seeking to understand China, by reviewing all
chapters referring to the Chinese case; those looking to understand Peru, by
doing the same with regards to the chapters referring to the Peruvian case;
those wishing to compare both national cases as a whole; and those with a
desire to compare the two cases in one or several specific topics covered by
the book. This study also provides a theoretical examination of the concept of
the middle-income trap. Overall, this academic effort by Chinese and Peruvian
scholars will contribute to mutual understanding and to enlarging cooperation
from both sides. It is fortunate that the book, published in 2021, can be an
academic contribution to the 50 anniversary of the establishment of diplomatic
relations between the People´s Republic of China and the Republic of Peru.
The editors would like to express their gratitude to all authors for their
valuable contributions. Special thanks should be given to Jia Zhongzheng,
Assistant Research Fellow of IWEP, CASS and Favio Leiva, Assistant to the
Director of the Center for China and Asia-Pacific Studies of Universidad del
Pacífico, for their help in the coordination and editing of this book. We also
would like to thank Universidad del Pacífico and CASS for their support of
this project and its publication by the China Social Sciences Press. Besides
this English edition, we have agreed that this book be translated into Chinese
and Spanish so that it is available in all three languages.
ZHANG Yuyan
Director