Middle-income trap: China, Malaysia and Thailand need freedom and openness

[webfact]

Middle-income trap
China, Malaysia and Thailand need freedom and openness
HIROSHI MURAYAMA, Nikkei senior staff writer

BANGKOK -- With China and other emerging countries experiencing economic slowdowns, there has been a lot of talk about the middle-income trap.

Malaysia and Thailand are said to have fallen into this snare -- a situation in which a country's economic development slows after achieving a certain level of income per person. Some observers speculate that China, too, will slide into it.

Yet there is debate. A Chinese critic has recently argued that the middle-income trap, as defined above, does not exist.

If it does exist, however, there appears to be a way to climb out of it. Comparing the three emerging countries with more advanced Asian economies reveals that free and open societies are key to innovation, a potent driver of growth that can help emerging countries overcome the trap.

Full story: http://asia.nikkei.com/Politics-Economy/Economy/China-Malaysia-and-Thailand-need-freedom-and-openness

-- NIKKEI ASIAN REVIEW 2016-01-25

[ezzra]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

[noitom]

The key to income mobility and innovation is a free and open society.

[trogers]

And free and open society would fall into another trap. Just look at the EU...

[Lunchbob]

Very smart writing. Nice to see some real, intelligent understanding.

[topt]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

what is a middle income trap?

If you bothered to read the linked article it explains what they mean........

[sebastion]

Thailand is generations away from a free and open society.

The old guards spawn are just as rotten.

[Srikcir]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

Attached for your information is an indepth treatise "Thailand in a Middle-income Trap" by Somchai Jitsuchon, TDRI Quarterly Review, June 2012 that maybe Murayama has read before he wrote his article. An excerpt:

"What made Thailand fall into the trap?

There is no consensus yet as to what causes a country to fall into a middle-income trap. Casual comparisons with those countries that are never caught in such a trap seem to lead to the observation that economic dynamism perhaps plays an important role. The dynamism applies to both the dynamic adjustment of the private sector and the policy-making process of the public sector. The corollary of this observation is that a country is more likely to fall into such a trap if it fails to adjust its national economic model and policies to fit changing environments. Unfortunately, that corollary seems to be applicable to Thailand. The country continues to depend on the same model of development that lifted it out of poverty—cheap labor, and low innovation, with technological acquisition mainly through technology importation. The old model does not work any more and will be increasingly limiting in the future ..."

A middle-income trap actually benefits the high-income class as a means to prevent wealth redistribution that can otherwise lead to power sharing or loss with a populus majority.

MiddleIncomeTrap.pdf

[Lupatria]

Thailand needs freedom and openness

Be patient! The single gateway to freedom and openness is under construction. 5bn Baht are not evenly distributed over night.

[OneZero]

To help better understand what the middle income trap is, here is a short quote from the article:

"Many emerging countries use their low labor costs to attract foreign investment, which in turn helps them achieve rapid, export-driven growth. But once these countries build their middle classes, labor costs increase and the pace of growth slows. Thus the need to shift to high value-added industries.

$5,000 threshold

Despite arguments about what actually defines a middle-income nation, by and large, a country's economy starts to grow modestly when its gross domestic product reaches $5,000 per person. It is harder to achieve growth once GDP per capita, as the yardstick is called, surpasses the $10,000 mark." end quote

My comment:

If Thailand could succeed in eliminating some of it's massive patronage fostered corruption problem, it could perhaps still be competitive if those proceed flowed into the workers hands through higher wages, rather than some "Hi-So's" hands which benefits only the Hi-So.

[Eric Loh]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

Attached for your information is an indepth treatise "Thailand in a Middle-income Trap" by Somchai Jitsuchon, TDRI Quarterly Review, June 2012 that maybe Murayama has read before he wrote his article. An excerpt:

"What made Thailand fall into the trap?

There is no consensus yet as to what causes a country to fall into a middle-income trap. Casual comparisons with those countries that are never caught in such a trap seem to lead to the observation that economic dynamism perhaps plays an important role. The dynamism applies to both the dynamic adjustment of the private sector and the policy-making process of the public sector. The corollary of this observation is that a country is more likely to fall into such a trap if it fails to adjust its national economic model and policies to fit changing environments. Unfortunately, that corollary seems to be applicable to Thailand. The country continues to depend on the same model of development that lifted it out of poverty—cheap labor, and low innovation, with technological acquisition mainly through technology importation. The old model does not work any more and will be increasingly limiting in the future ..."

A middle-income trap actually benefits the high-income class as a means to prevent wealth redistribution that can otherwise lead to power sharing or loss with a populus majority.

MiddleIncomeTrap.pdf

Excellent editorial attachment for a good description of the middle income trap. Feudal systems anywhere in the world and in Thailand fear rising middle income social class who are educated, well inform, connected and influential. Middle incomes are also protective of their rights and have high regards for meritocracy. Extreme opposite of what the elites and rich minority would like for Thailand to stay at low labor cost and low education opportunities.

[sawadee1947]

very true: open free society....can't see however. Good article

[Time Traveller]

If you rely on being a low cost country, then you'll never progress beyond middle income. How can you expect anything more when all of your technology is stolen from other high income countries?

[Johpa]

Another perspective on the "middle income trap" is as the middle class grows so does their debt. An ever increasing percentage of income is paid to the banks as interest who then make even more loans that inflate assets such as housing, which acts as the collateral on the original loans, until the whole stack of cards falls. Growth slows as less money circulates through the general economy purchasing goods and services but instead pays down debt. It has little to do with open societies vs dictatorships.

[car720]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

Very well said.

[car720]

The key to income mobility and innovation is a free and open society.

I thought by very definition the word Thailand meant 'freeland'.

[car720]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

what is a middle income trap?

If you bothered to read the linked article it explains what they mean........

I do believe his question was rhetorical.

[car720]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

Attached for your information is an indepth treatise "Thailand in a Middle-income Trap" by Somchai Jitsuchon, TDRI Quarterly Review, June 2012 that maybe Murayama has read before he wrote his article. An excerpt:

"What made Thailand fall into the trap?

There is no consensus yet as to what causes a country to fall into a middle-income trap. Casual comparisons with those countries that are never caught in such a trap seem to lead to the observation that economic dynamism perhaps plays an important role. The dynamism applies to both the dynamic adjustment of the private sector and the policy-making process of the public sector. The corollary of this observation is that a country is more likely to fall into such a trap if it fails to adjust its national economic model and policies to fit changing environments. Unfortunately, that corollary seems to be applicable to Thailand. The country continues to depend on the same model of development that lifted it out of poverty—cheap labor, and low innovation, with technological acquisition mainly through technology importation. The old model does not work any more and will be increasingly limiting in the future ..."

A middle-income trap actually benefits the high-income class as a means to prevent wealth redistribution that can otherwise lead to power sharing or loss with a populus majority.

MiddleIncomeTrap.pdf

His exert is very eloquent but, considering that we have recently been told that 3% of the world's population own 99% of the wealth, in which way does this equate to just these 3 countries?

[car720]

Another perspective on the "middle income trap" is as the middle class grows so does their debt. An ever increasing percentage of income is paid to the banks as interest who then make even more loans that inflate assets such as housing, which acts as the collateral on the original loans, until the whole stack of cards falls. Growth slows as less money circulates through the general economy purchasing goods and services but instead pays down debt. It has little to do with open societies vs dictatorships.

Agreed except perhaps from the dictatorships of banks.

[CantSpell]

"What made Thailand fall into the trap?

There is no consensus yet as to what causes a country to fall into a middle-income trap. Casual comparisons with those countries that are never caught in such a trap seem to lead to the observation that economic dynamism perhaps plays an important role. The dynamism applies to both the dynamic adjustment of the private sector and the policy-making process of the public sector. The corollary of this observation is that a country is more likely to fall into such a trap if it fails to adjust its national economic model and policies to fit changing environments. Unfortunately, that corollary seems to be applicable to Thailand.

The country continues to depend on the same model of development that lifted it out of poverty—cheap labor, and low innovation, with technological acquisition mainly through technology importation. The old model does not work any more and will be increasingly limiting in the future ..."

A middle-income trap actually benefits the high-income class as a means to prevent wealth redistribution that can otherwise lead to power sharing or loss with a populus majority.

MiddleIncomeTrap.pdf

That part.....

For Thailand finest and richests, it is NOT a trap....

It's a business model

[MorristheRunt]

A free and open society needs free and open people.

A country gets the goverment it deserves.

The people need to speak up.....

[MaxLee]

If you rely on being a low cost country, then you'll never progress beyond middle income. How can you expect anything more when all of your technology is stolen from other high income countries?

China, Malaysia and Thailand need freedom and openness

All, that those in power in these above countries, especially the 1st one, care about is to fill their own pockets......

Edited January 25, 2016 by MaxLee

[trainman34014]

The key to income mobility and innovation is a free and open society.

I thought by very definition the word Thailand meant 'freeland'.

A better name is 'Lieland' .

[MZurf]

Very smart writing. Nice to see some real, intelligent understanding.

I hope you were not referring to the post preceding yours.....

[realenglish1]

This is one reason that Thailand will not become a Super power like Singapore or Hong Kong It is not a free and open society

[Enoon]

What a load of rubbish of an article, what is a middle income trap? has someone conspired to trap them?

I know of billions of people on this earth who will give their right are to be in this ' middle income

trap' people who has nothing but the shirt on their back....

Attached for your information is an indepth treatise "Thailand in a Middle-income Trap" by Somchai Jitsuchon, TDRI Quarterly Review, June 2012 that maybe Murayama has read before he wrote his article. An excerpt:

"What made Thailand fall into the trap?

There is no consensus yet as to what causes a country to fall into a middle-income trap. Casual comparisons with those countries that are never caught in such a trap seem to lead to the observation that economic dynamism perhaps plays an important role. The dynamism applies to both the dynamic adjustment of the private sector and the policy-making process of the public sector. The corollary of this observation is that a country is more likely to fall into such a trap if it fails to adjust its national economic model and policies to fit changing environments. Unfortunately, that corollary seems to be applicable to Thailand. The country continues to depend on the same model of development that lifted it out of poverty—cheap labor, and low innovation, with technological acquisition mainly through technology importation. The old model does not work any more and will be increasingly limiting in the future ..."

A middle-income trap actually benefits the high-income class as a means to prevent wealth redistribution that can otherwise lead to power sharing or loss with a populus majority.

MiddleIncomeTrap.pdf

His exert is very eloquent but, considering that we have recently been told that 3% of the world's population own 99% of the wealth, in which way does this equate to just these 3 countries?

It doesn't. The original article is from The Nikkei Asian Review, which is concerned with this region, and is pointing out as examples 3 regional countries which are in this situation.

Cambodia, Laos and Myanmar have not yet risen to this level. Japan, South Korea and Singapore have risen above it.

The Nikkei Asian Review is offering a prize of a barbecue pack of meat to anyone who can guess what levels Vietnam,Taiwan and Indonesia are at.

Edited January 25, 2016 by Enoon