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Will Inequality Lead China to the Middle Income Trap?

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  • S. Nazrul Islam

Abstract

China has departed from the East Asian model of development by letting inequality to rise to a high level, which is contributing to China’s current problems of macroeconomic imbalance, declining efficiency of capital, and rising social tensions. If inequality persists, China may get caught in the “inequality-trap,” which may then lead it to the “middle income trap (MIT).” Fortunately, China still has the levers to pull to reduce inequality and avoid MIT. Measures along both the “wage route” and the “redistributive route” can be adopted for this purpose. In addition, China may pursue the “cooperative route” to more equitable distribution.

Suggested Citation

  • S. Nazrul Islam, 2015. "Will Inequality Lead China to the Middle Income Trap?," Working Papers 142, United Nations, Department of Economics and Social Affairs.
    • Handle: RePEc:une:wpaper:142
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    File URL: http://www.un.org/esa/desa/papers/2015/
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    Citations

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    Cited by:

    1. Zhou, Haiwen, 2017. "Will China Avoid the Middle-Income Trap?," MPRA Paper 82688, University Library of Munich, Germany.
    2. Yaya, OlaOluwa S & Vo, Xuan Vinh & Adekoya, Oluwasegun B., 2021. "Convergence among themselves and Middle-income trap of South-East Asian Nations: Findings from a New approach," MPRA Paper 109372, University Library of Munich, Germany.
    3. Glawe, Linda & Wagner, Helmut, 2020. "China in the middle-income trap?," China Economic Review, Elsevier, vol. 60(C).
    4. Tamara Merkulova & Kateryna Kononova & Margarita Deyneka, 2018. "Income inequality influence on economic growth and sustainable development," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 0(2), pages 27-43.
    5. Vivarelli, Marco, 2018. "Globalisation, structural change and innovation in emerging economies: The impact on employment and skills," MERIT Working Papers 2018-037, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    China; Middle Income Trap; Inequality Trap; Inequality; Redistribution; Cooperatives;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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