Governing Openness?Openness Adjustment Mechanism and"Middle-Income Trap"in East Asia
The"middle-income trap"results when a middle-income country experiencesfailure of industrial structure upgrading and continuous expansion of income gap,which ultimately leads to sluggish growth in Gross National Income(GNI)per capita.Maintaining an open economy is a necessary condition for economic takeoff in East Asia,but for East Asian economies that have achieved middle income status,an open economy brings with it significant pressure in industrial upgrading and with respect to social welfare.As such,whether East Asian economies can overcome the"middle-income trap"largely depends on whether they establish an effective openness adjustment mechanism once they achieve middle-income status.Openness adjustment mechanism refers to the policy measures that East Asian economies use to adjust the structure of production factors under conditions of economic openness,usually taking the form of industrial development policies and social welfare policies.These in turn are divided into two types:a Progressive Mechanism that focuses on addressing and transforming disadvantageous factors within the economy and a Conservative Mechanism that aims at strengthening and better exploiting comparative advantages.Economies that establish the former one are more likely to overcome the"middle-income trap,"while those that develop the latter one are more likely to fall into the trap.The article systematically tests this analytical framework considering the two East Asian cases of South Korea and Thailand.
"Middle-Income Trap"East AsiaOpenness Adjustment MechanismIndustrial Development PolicySocial Distribution Policy
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