Will China be caught in the middle-income trap? the economic path of South Korea and Malaysia may help provide the answer
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Authors
Cook, Damon J.
Subjects
Middle-income trap
China
South Korea
Malaysia
Rule of Law
Corruption
Property Rights
Education
Demography
Total Factor Productivity
China
South Korea
Malaysia
Rule of Law
Corruption
Property Rights
Education
Demography
Total Factor Productivity
Advisors
Barma, Naazneen
Date of Issue
2014-12
Date
Dec-14
Publisher
Monterey, California: Naval Postgraduate School
Language
Abstract
This thesis investigates the feasibility of China’s transforming to a consumption-led economy. Specifically, it seeks to determine whether China is destined to be caught in the middle income trap, whereby it fails to graduate to high-income status, and thus is trapped in an economic state of equilibrium that is very difficult to change with short-term forces. To investigate this question, this thesis compares China’s economic development with the economic trajectories of South Korea and Malaysia, which have experienced similar economic growth pressures, to assess the likelihood that China’s growth will stagnate over the near to middle term. To do so, this thesis will examine the effect of rule of law, education, and demographics on economic growth. Given China’s rapid economic ascent based on its export-led and investment-dependent economy, the evidence suggests China’s economic growth is decreasing despite popular belief China is on a trajectory to overtake the United States as the world’s top economy. Although the Chinese Communist Party has slowly implemented phased economic reform since the Deng Xiaoping era, it still lacks many institutions necessary to transform into a consumption-led economy. This thesis concludes with a scorecard analysis that will provide insight into China’s economic future.
Type
Thesis
Description
Series/Report No
Department
National Security Affairs
Organization
Identifiers
NPS Report Number
Sponsors
Funder
Format
Citation
Distribution Statement
Approved for public release; distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.