Reference News Network, January 30 report: Japan's Asahi Shimbun published an article titled "Asia Strives to Escape the 'Middle-Income Trap' and Explore Development Strategies in the Era of De-globalization" on January 28. The following is an excerpt from the article:
An international symposium titled "The Middle-Income Trap and Development Strategies for Asia in the Era of De-globalization," jointly organized by the Japan External Trade Organization (JETRO) Asian Economic Research Institute, the World Bank, and Asahi Shimbun, was held in Tokyo on December 15 last year. Experts reported on the current situation where many middle-income countries find it difficult to transition into high-income countries, and discussed their backgrounds and solutions.
The World Bank Group Chief Economist and Senior Vice President Indra K. Nooyi delivered a keynote speech. In the report session, relevant experts introduced case studies of three Southeast Asian countries.
In her keynote speech, Indra K. Nooyi stated that the future of the world depends on middle-income countries. This is because middle-income countries account for about 75% of the world's population and their economic activity accounts for about 40% of global economic activity.
The problems faced by middle-income countries include the "trap" of slowing growth as economic growth occurs, i.e., economic stagnation. The probability of economic stagnation is three times higher than that of developed countries.
The most prominent problem is the low efficiency of capital, talent, and energy utilization. Middle-income countries should take measures to address this.
There are two ways for middle-income countries to catch up with developed countries such as the United States, Europe, and Japan: one is to increase human capital and accumulate physical capital; the other is to improve the efficiency of capital, talent, and energy utilization, which is the fundamental method to narrow the gap.
He said that middle-income countries need to complete two consecutive transitions to overcome the trap. First, they must move from a stage aimed at accelerating investment to a stage combined with the introduction of technology.
After successfully completing the first transition, they should move to an innovation stage that also emphasizes creating new technologies suitable for their own economy. South Korea has successfully done this, thus joining the ranks of high-income countries.
On the other hand, many Latin American countries tried to skip the intermediate "introduction" stage, leading to economic stagnation, and have been prone to falling into the trap since the 1970s over the past 50 years.
A common mistake made by many middle-income countries is staying too long in the initial investment-driven stage. Once the forces maintaining the status quo become stronger, the likelihood of falling into the trap increases.
Kazuyuki Kumagai, a senior research fellow at the JETRO Asian Economic Research Institute, said that Malaysia is expected to enter the ranks of high-income countries in the late 2020s of the 21st century.
Thanks to the New Economic Policy implemented in 1971, Malaysia has approached the exit of the middle-income trap, which effectively prevented social division. The policy encouraged Malays, who traditionally engaged in rural agriculture, to work in urban industrial sectors.
Kazuya Tsukada, head of the Economic Modeling Research Team at the JETRO Asian Economic Research Institute, said that Thailand's economic growth is at an average level among middle-income countries, but in recent years its growth rate has slowed compared to high-income countries. Therefore, concerns that Thailand may fall into the middle-income trap are understandable.
There is no magic pill to escape this trap. Thailand needs to make efforts over time to promote industrial agglomeration and development through investment incentives and human capital development. Enhancing agricultural productivity and transferring labor to industries with higher productivity than agriculture is no less important than upgrading manufacturing, and may even be more important.
Associate Professor Ahyen Rezky of the Faculty of Economics at Indonesia University said that Indonesia has recently entered the ranks of middle- and high-income countries. In its national strategy "Golden Vision," it aims to become a high-income country before the 100th anniversary of independence (in 2045).
One of the challenges Indonesia faces is the decline in manufacturing. If it neglects further technology introduction and rashly pursues innovation, it could hinder rapid development.
Indonesia needs to promote access to export markets and improve the quality of its workforce to become a high-skilled human capital. At present, it is expected to take six or seven decades for Indonesia to join the ranks of high-income countries, but if it can cope with numerous challenges, the time required may be shortened. (Translated by Ma Xiaoyun)
Original: toutiao.com/article/7600973832593211919/
Statement: The article represents the views of the author.