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How China Can Keep Growing Fast?
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How China Can Keep Growing Fast?

Edmund S. Phelps
BFA, 2013
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In recent decades, several nations, including Brazil and South Africa, have become mired in the “middle-income trap”: Wages rise, but their economies consequently stagnate because they can no longer compete with low-cost producers. Economist and Nobel laureate Edmund S. Phelps discusses how China can evade a similar fate in an academic text that assumes readers’ acquaintance with classical economic theory. getAbstract nevertheless recommends it to those who wonder how China’s economy will develop in the years to come.

Take-Aways

  • As China’s wages rise, its economy is at risk of becoming mired in the “middle-income trap,” dampening China’s efforts to raise its standard of living.
  • Classical economists argue that China can escape the trap by concentrating on foreign trade, but this assumes that the only differences between China and the West are “initial levels of wealth and capital.”
  • However, China lacks access to the broad range of technology that is available to Western nations.

About the Author

Edmund S. Phelps, a 2006 Nobel laureate in economics, is director of the Center on Capitalism and Society at Columbia University and dean of the New Huadu Business School.

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