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>middle income trap China is not a good example for the middle income trap. Middle income trap countries relied on cheap labors but could not move up in the va

>middle income trap China is not a good example for the middle income trap. Middle income trap countries relied on cheap labors but could not move up in the value chain. China has moved up the value chain. They're the top or close to the top for many things including mobile phones, chip manufacturing (7nm), AI, software, 5G, electric car batteries, nuclear power, fusion research, quantum computers, etc. They also publish more scientific papers than any other country, by a significant amount. Conversely, true middle-income country like Brazil and Thailand have not moved up in the value chain one bit. China, Singapore, Hong Kong, South Korea, and Japan are all East Asian countries. They all have very similar values when it comes to education, hard work, and entrepreneurism. It's only a matter of time until China joins the first world. Their major cities are already first-world. Yes, there are countries that have cheaper labor than China right now but China should be able to replace that with higher value services such as exporting 5G tech or nuclear power plants.

alephnerd 4y ago
Yet, median income [0] and HDI [1] both at the macro level and at the prefecture level are comparable to Brazil [2][3] and lag behind both Russia [4][5] and Mexico [6][7]. There is no denying the amount of growth the service sector in China has seen, yet a lot of this growth and development is among a sliver of the population living in better developed regions such as the various coastal prefectures. Beijing, Tianjin, Guangzhou, Shanghai, etc can be treated as developed, but what about the hinterlands such as Sichuan, Ningxia, Hunan, Guangxi, etc? This middle income trap is not a good thing by the way - I take no joy pointing this harsh truth out because this means hundreds of millions of PRC nationals are stuck in less than ideal economic positions. Also, if we are talking about the value chain, Brazil is very high in the ONG (Petrobras, Odenbrecht), Aeronautics (Embraer), Automotive, and Defense (Odenbrecht, Embraer) value chain thanks to economic policies in the 90s and 2000s that are comparable to those the PRC has started adopting in the past 10-15 years. [0] http://www.stats.gov.cn/english/PressRelease/202201/t20220118_1826649.html http://www.stats.gov.cn/english/PressRelease/202201/t2022011... [1] https://en.wikipedia.org/wiki/List_of_administrative_divisions_of_Greater_China_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_administrative_divisio... [2] https://en.wikipedia.org/wiki/List_of_Brazilian_federative_units_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_Brazilian_federative_u... [3] https://agenciabrasil.ebc.com.br/en/economia/noticia/2017-02/brazils-national-average-household-income-capita-40016-2016 https://agenciabrasil.ebc.com.br/en/economia/noticia/2017-02... [4] https://en.wikipedia.org/wiki/List_of_federal_subjects_of_Russia_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_federal_subjects_of_Ru... [5] https://tass.com/economy/1301957 https://tass.com/economy/1301957 [6] https://en.wikipedia.org/wiki/List_of_Mexican_states_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_Mexican_states_by_Huma... [7] https://www.efe.com/efe/english/life/mexican-households-have-an-average-of-3-8-members-843-in-monthly-income/50000263-2666718 https://www.efe.com/efe/english/life/mexican-households-have...
- senttoschool 4y ago
  >Yet, median income [0] and HDI [1] both at the macro level and at the prefecture level are comparable to Brazil [2][3] and lag behind both Russia [4][5] and Mexico [6][7]. This is the present. It does not mean China is a middle income trap nation. It continues to grow and advance in innovation. Also, China's GDP PPP per capita has already surpassed Brazil. GDP PPP is a much better measure of stand of living than GDP/capita. The biggest factor in whether a country stays in the middle income territory is innovation. China is innovating. In some areas, it's already leading.
  - alephnerd 4y ago
    GDP and GDP PPP both quantify production, not income and living standard metrics. While there is often a correlation between production and rising living standards, it is a lossy indicator that fails to take into account inequality and differing regional CoLs. For this reason Median income plus HDI is the standard metric used in developmental economics to gauge QoL, as they give you insights on access to healthcare, education, inequality, and other metrics critical to the functioning of societies. Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also 1. receive a massive subsidy from either the EU (southern Europe, eastern Europe, Ireland) or the US (South Korea, Israel, Taiwan) 2. have a small population (<30mil at time of transition) It is harder to lift a nation of 400 million poor (using PRC poverty definition) people than to lift a poor nation of 30-40 million. Also, this same trap that China is in is something that India, Vietnam, Indonesia, and the Phillipines will face in 20 years
    - senttoschool 4y ago
      >GDP and GDP PPP both quantify production, not income and living standard metrics. Purchasing power parity (PPP) allows for economists to compare economic productivity and standards of living between countries. https://www.investopedia.com/updates/purchasing-power-parity-ppp/ https://www.investopedia.com/updates/purchasing-power-parity... >Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also Brazil does not lead in Aerospace, ONG, Automotive. South Africa does not lead in defense. And so on. They do not possess technology that other countries depend on. For example, Embraer's revenue in 2021 was 4.2 billion. Puny compared to Airbus' 52 billion. If Embraer stopped operating tomorrow, the world would not notice. We're talking about actual innovation and a technology advantage. You mentioned that Mexico leads in automotive. What? Mexico does not have any cutting edge automotive technology that other nations depend on. Mexico is a hub for car manufacturing because it's close to the US and provides cheap labor. They do not produce any car tech that other countries cannot produce. Real innovation is something like China's CATY new car battery which outcompeted Tesla's 4680 battery. https://medium.com/predict/tesla-is-about-to-lose-its-tech-advantage-5a6cb9161a55 https://medium.com/predict/tesla-is-about-to-lose-its-tech-a... Before Tump's ban, Huawei was set to provide 5G technology to the UK, a country that could not produce 5G equipment on its own. A true middle-income country could never do this.

alephnerd 4y ago

Yet, median income [0] and HDI [1] both at the macro level and at the prefecture level are comparable to Brazil [2][3] and lag behind both Russia [4][5] and Mexico [6][7]. There is no denying the amount of growth the service sector in China has seen, yet a lot of this growth and development is among a sliver of the population living in better developed regions such as the various coastal prefectures. Beijing, Tianjin, Guangzhou, Shanghai, etc can be treated as developed, but what about the hinterlands such as Sichuan, Ningxia, Hunan, Guangxi, etc? This middle income trap is not a good thing by the way - I take no joy pointing this harsh truth out because this means hundreds of millions of PRC nationals are stuck in less than ideal economic positions. Also, if we are talking about the value chain, Brazil is very high in the ONG (Petrobras, Odenbrecht), Aeronautics (Embraer), Automotive, and Defense (Odenbrecht, Embraer) value chain thanks to economic policies in the 90s and 2000s that are comparable to those the PRC has started adopting in the past 10-15 years. [0] http://www.stats.gov.cn/english/PressRelease/202201/t20220118_1826649.html http://www.stats.gov.cn/english/PressRelease/202201/t2022011... [1] https://en.wikipedia.org/wiki/List_of_administrative_divisions_of_Greater_China_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_administrative_divisio... [2] https://en.wikipedia.org/wiki/List_of_Brazilian_federative_units_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_Brazilian_federative_u... [3] https://agenciabrasil.ebc.com.br/en/economia/noticia/2017-02/brazils-national-average-household-income-capita-40016-2016 https://agenciabrasil.ebc.com.br/en/economia/noticia/2017-02... [4] https://en.wikipedia.org/wiki/List_of_federal_subjects_of_Russia_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_federal_subjects_of_Ru... [5] https://tass.com/economy/1301957 https://tass.com/economy/1301957 [6] https://en.wikipedia.org/wiki/List_of_Mexican_states_by_Human_Development_Index https://en.wikipedia.org/wiki/List_of_Mexican_states_by_Huma... [7] https://www.efe.com/efe/english/life/mexican-households-have-an-average-of-3-8-members-843-in-monthly-income/50000263-2666718 https://www.efe.com/efe/english/life/mexican-households-have...

senttoschool 4y ago
>Yet, median income [0] and HDI [1] both at the macro level and at the prefecture level are comparable to Brazil [2][3] and lag behind both Russia [4][5] and Mexico [6][7]. This is the present. It does not mean China is a middle income trap nation. It continues to grow and advance in innovation. Also, China's GDP PPP per capita has already surpassed Brazil. GDP PPP is a much better measure of stand of living than GDP/capita. The biggest factor in whether a country stays in the middle income territory is innovation. China is innovating. In some areas, it's already leading.
- alephnerd 4y ago
  GDP and GDP PPP both quantify production, not income and living standard metrics. While there is often a correlation between production and rising living standards, it is a lossy indicator that fails to take into account inequality and differing regional CoLs. For this reason Median income plus HDI is the standard metric used in developmental economics to gauge QoL, as they give you insights on access to healthcare, education, inequality, and other metrics critical to the functioning of societies. Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also 1. receive a massive subsidy from either the EU (southern Europe, eastern Europe, Ireland) or the US (South Korea, Israel, Taiwan) 2. have a small population (<30mil at time of transition) It is harder to lift a nation of 400 million poor (using PRC poverty definition) people than to lift a poor nation of 30-40 million. Also, this same trap that China is in is something that India, Vietnam, Indonesia, and the Phillipines will face in 20 years
  - senttoschool 4y ago
    >GDP and GDP PPP both quantify production, not income and living standard metrics. Purchasing power parity (PPP) allows for economists to compare economic productivity and standards of living between countries. https://www.investopedia.com/updates/purchasing-power-parity-ppp/ https://www.investopedia.com/updates/purchasing-power-parity... >Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also Brazil does not lead in Aerospace, ONG, Automotive. South Africa does not lead in defense. And so on. They do not possess technology that other countries depend on. For example, Embraer's revenue in 2021 was 4.2 billion. Puny compared to Airbus' 52 billion. If Embraer stopped operating tomorrow, the world would not notice. We're talking about actual innovation and a technology advantage. You mentioned that Mexico leads in automotive. What? Mexico does not have any cutting edge automotive technology that other nations depend on. Mexico is a hub for car manufacturing because it's close to the US and provides cheap labor. They do not produce any car tech that other countries cannot produce. Real innovation is something like China's CATY new car battery which outcompeted Tesla's 4680 battery. https://medium.com/predict/tesla-is-about-to-lose-its-tech-advantage-5a6cb9161a55 https://medium.com/predict/tesla-is-about-to-lose-its-tech-a... Before Tump's ban, Huawei was set to provide 5G technology to the UK, a country that could not produce 5G equipment on its own. A true middle-income country could never do this.