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International Trade and Non-Convergence Trap for Middle-Income Countries
December 8, 2016DECRG Kuala Lumpur Seminar Series

Among the 101 middle-income countries in 1960, only thirteen of them managed to sufficiently converge to rich countries and become high-income economies by 2008. Why? We develop a three-country growth model with trade to show how middle-income countries can be sandwiched by poorer countries that chase from behind and richer countries that press from front. It is shown that the chasing effect conditionally exists and never works in both intensive and extensive margins simultaneously, whereas the pressing effect is always active in the intensive margin but only conditionally active in the extensive margin. Empirical evidence also supports these findings. We also show how a middle-income country should optimally allocate resources between boosting productivities of incumbent varieties and enhancing the learning of new varieties by taking into account behaviors of its trade partners.

  • Yong Wang

    Associate Professor of Economics and Deputy Director of the Center for New Structural Economics, Peking University
    Yong Wang is an Associate Professor of Economics and Deputy Director of the Center for New Structural Economics at Peking UniversityY. He obtained PhD from University of Chicago, where he won the Martin and Margaret Lee Prize in Price Theory. His research fields are Growth and Development, Macroeconomics, Political Economy, China and India Economies. His recent research topics include structural change, industry dynamics, industrial policies, China’s state capitalism, and middle-income trap. Yong is currently on leave from the Department of Economics at Hong Kong University of Science and Technology. He was a resident research fellow at the World Bank (2010-2011). He publishes papers on Journal of Development Economics, Journal of Monetary Economics, etc. and also serves as a guest editor for China Economic Review. Yong was frequently invited to present his research at policy institutions including IMF, World Bank, Asian Development Bank, US Department of State, US Department of Treasury, Federal Reserve Bank of Dallas, People’s Bank of China, and Korean Institute of Finance.
Event Details
  • WHEN: Thursday, December 8, 2016; 12:30-2:00PM
  • WHERE: World Bank Malaysia Office, Level 3, Sasana Kijang, No. 2, Jalan Dato’ Onn
  • RSVP: Kindly RSVP by Wednesday, December 7, 2016