What explains why only a handful of countries which have attained middle-income level have subsequently been successful in attaining income convergence with high-income countries, while most of their peers falter? The problem most face has been labelled as the “Middle-Income Trap.” How, precisely, does the trap impact once-promising economies, and can China, the world’s second largest economy, escape the trap? Are there examples China can emulate? The following pages elucidate these issues.
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