1
Policy Mimicry, Institutional Isomorphism, and Middle Income Traps:
Lessons For and From Thailand, Korea and China
M Ramesh and M. Howlett
National University of Singapore
Policy Mimicry, Institutional Isomorphism, and Middle Income Traps: Lessons For and From Thailand,
Korea and China ................................................................................................................................................... 1
Introduction: Middle-Income Traps and Other Forms of Economic Stagnation.................................. 1
Issues in Identifying Middle-Income Trap............................................................................................ 2
The Role of Innovation and Learning in Creating, and Overcoming, the MIT ...................................... 5
Comparative Economic Performance: Thailand, Korea, China ............................................................ 7
Thailand: The Failure to Move Beyond Isomorphism and Emulation ................................................ 11
South Korea: The Transitions to a High Level NIS .............................................................................. 13
China: Alternative Practices in NIS Development .............................................................................. 14
Mimesis and Isomorphism as Innovation Strategies for Overcoming Middle Income trap ............... 16
Endnotes ........................................................................................................................................... 18
References......................................................................................................................................... 20
Introduction: Middle-Income Traps and Other Forms of Economic Stagnation
As Agenor, Canuto and Jelinic (2012) define it, a ‘middle income trap’ (MIT) refers to a situation in a
country whereby there develops a “stable, low-growth economic equilibria where talent is misallocated and
innovation stagnates.” (p. 1)1 Many studies have focused on the phenomena of stagnation. Aiyar et al for
example identify several factors that determine economic growth, including institutions, demography,
infrastructure, macroeconomic environment, economic structure, trade structure, and other factors.
Thus, La Porta, Lopez-de-Silanes, Shleifer, and Vishny (1997, 1998) have argued that the quality of a
country’s legal institutions – such as legal protection of outside investors – could affect the extent of rent
seeking by corporate insiders and thereby promote financial development. [1] Another strand of the literature
has emphasized the advantage of limited government (Buchanan and Tullock, 1963; North, 1981 and 1990;
and DeLong and Shleifer, 1993),” [1] while Mauro (1995) finds that corruption lowers investments, thereby
retarding economic growth, although Mironov (2005) cautions that this is true of only certain kinds of
corruption. Knack and Keefer (1997) have also provided evidence that formal institutions that promote
property rights and contract enforcement help build social capital, which in turn is related to better economic
performance and growth.” [1]
It is important to recognize that the MIT is not the only type of stable stagnating equilibria and many
low income and also high income countries (Japan, for example) have also developed relatively stable
‘trajectories’ in which their growth has levelled off or stagnated. Nor is MIT a new phenomenon. There are
many countries in Latin America and some in Africa that have been in the middle income bracket for decades
[33] Separating what is new about the ‘middle income trap’ and other kinds of traps and trajectories is
2
therefore important both in terms of understanding whether such traps exist and are unique in any way, and,
secondly, how they are to be overcome. This is the purpose of this paper. The available evidence shows that
income traps are real but may be overcome with appropriate policy measures. Emulating other countries with
successful record in this regard offers considerable scope for improvement for all countries except those
already at high level. However, new economic and demographic challenges are emerging for which there is
little precedence and call for policy ingenuity. These issues are discussed below in reference to Thailand,
South Korea, and China.
Issues in Identifying Middle-Income Trap
In general it is not unusual for a country to become mired at a middle income level. The chart below
compares a country’s per capita income (relative to United States, adjusted for purchasing power) in 1960
with its income in 2008. Only 13 countries are said to have moved into a high income bracket over this half
century including Hong Kong, Japan, South Korea, Singapore, and Taiwan. Most high income countries simply
entered the twentieth century as wealthy and stayed that way while others began and stayed poor.
Source: Screenshot from The Economist (2012)
The ‘middle income trap’, however, refers to more than just the process of attaining a stable but
stagnating equilibrium. As Aiyar et al have put it “The middle-income trap is the phenomenon of rapidly
growing economies stagnating at middle-income levels2 and failing to graduate into the ranks of high-income
countries.” 3[1]
3
That is, a MIT is a specific two stage pattern of development in which some progress in incomes
occurred which allowed a country to climb out of ‘low income’ status but was then followed by failure to
continue to climb into the ranks of ‘high income’ countries. Unlike simply stagnating at some given level, this
particular kind of trajectory is a challenge to some orthodox economic thinking which generally assumes that
once the appropriate conditions are present to allow a transition from low to medium levels of income and a
country has transitioned to middle-income status, these same conditions will continue in place or lead to a
virtuous path of development towards a high income status.4
Typically, according to the World Bank, MIT countries have the following characteristics: low
investment ratios, slow manufacturing growth, limited industrial diversification, and poor labour market
conditions. Eichengreen, Park, and Shin (2012), define a growth slowdown episode as one in which three
conditions are satisfied: i) growth in the preceding period is greater than or equal to 3.5 percent per annum;
ii) the difference in growth between the current and preceding period is greater than or equal to 2 percentage
points per annum, and iii) the country’s per capita income exceeds US$ 10,000 in 2005 constant international
prices. [1]
But the MIT phenomenon raises crucial conceptual, empirical and methodological issues, such as
when to determine the ‘start’ of a trajectory, what should be considered as the defining features of a “trap” be it GDP growth, environmental deterioration, or stagnant or declining well-being, - what triggers the trap,
and how the trap can be avoided.
Several preliminary insights are available in the literature as to why such traps occur. Arthur Lewis, for
example, argued as far back as the 1950s that productivity gains were achieved as labour shifted from lowproductivity agriculture to more productive manufacturing, a process that could be expedited by appropriate
policy measures5. Following his insight, “The migration of labour from agriculture to manufacturing, and the
corresponding structural transformation of the economy have come to be viewed as the engine of economic
development and growth (Harris and Todaro, 1970; Lewis, 1979).” [1]
While helpful in explaining the initial development situation in many countries, such economistic
explanations did not explain why the newly productive industrializing countries would then stagnate. Other
work in dependency theory (Wallerstein, Amin et al CITES)6 blamed unfair terms of trade and protectionism
while others (A. G. Frank CITES)7 blamed neo-colonial investment practices and political conditions in many
countries favoring large land owners and commericial practices rather than manufacturing. And some
transitions in income did occur in countries lin the 1960s and 1970s as world trade and investment opened up
and countries engaged in different divisions of labour internationally (CITES ON WTO AND 1970s and 1980s
Developments – Hellenier et al).8
However, such explanations do not explain why stagnation would occur once trading conditions
equalized and countries were governed by governments seeking productivity and trade enhancement and
general improvements in wages and working conditions rather than self-enrichment- the specific phenomena
associated with the ‘middle income trap’. Some explanations focus on changes in demographic factors as key
variables. Several papers , for example, document a positive impact of the working age ratio on economic
growth in a cross-section of countries (e.g. Bloom and Williamson, 1998; Bloom and Canning, 2004). Others
find that national savings rates are strongly connected to demographic structure (Higgins, 1998; Kelley and
Schmidt, 1996). Another approach is to focus on particular countries or regions. Aiyar and Mody (2011) use
data on the heterogeneous evolution of the age structure of Indian states to conclude that much of the
country’s growthh acceleration since the 1980s can be attributed to the demographic transition. Bloom,
Canning, and Malaney (2000) and Mason (2001) find that East Asia’s “economic miracle” was associated with
a major transition in age structure.” Other studies have suggested that demographic variable of interest
include the sex ratio, a measure of gender bias. Sen (1992) and others have argued that the phenomenon of
4
“missing women” reflects the cumulative effect of gender discrimination against all cohorts of females alive
today. Gender bias could impact economic growth through higher child mortality, increased fertility rates, and
greater malnutrition (Abu-Ghaida and Klasens, 2004). In their study of Indian states, Aiyar and Mody (2011)
find that a more equal sex ratio is robustly associated with higher economic growth.” [1]
While it has long been recognized that economic growth does not necessarily lead to equal
distribution of income, recent findings increasingly point to evidence that equality supports growth and,
conversely, inequality stymies it. This poses new challenges for countries with high and growing inequality
which had been harbouring the view, fostered by Kuznetz hypothesis, that inequality will decline when
economic development reaches middle income levels. The phenomenon of population ageing – as a result of
declining birth and increasing life span – with rise in income has been recognized since the 1970s. What was
less recognized that some countries , particularly in Asia, will turn old before they become rich, posing new
development challenges. Aged population imposes additional costs on public finance which may diminish
resources available for development if not addressed effectively.
It is now increasingly recognized that the level of income inequality is a significant determinant of
economic growth. “First, large inequalities foster political and social instability as more people engage in
activities, such as crime and violent protests, which deter investments. Second, large inequality with credit
market imperfection results in under-investment in human capital. Finally, countries with high inequality
redistribute more, which creates distortions and lowers growth.” [35] “9
However, other studies focus on changes in investment activity and especially infrastructure
investment. This conveys beneficial externalities to a gamut of productive activities, and in some instances has
characteristics of a public good (e.g. a road network might be non-rivalrous at least up to some congestion
threshold). For this reason, it has been uncontroversially viewed as positively related to economic growth, at
least up to a point. Nonetheless, a survey by Romp and De Hann (2007) shows that the empirical literature has
found mixed results, especially when proxies such as public investment are used to measure infrastructure
development. There is also a long tradition of literature pointing to the perils of over-investment (Schumpeter,
1912; Minsky, 1986, 1992). For example, Hori (2007) argues that the investment slump after the Asian
Financial Crisis of the late 1990s was at least partly due to overinvestment prior to the investment booms
have often been associated with excessive borrowing and rapid accumulation of public and/or external debt.
Inflation has also been associated with negative growth outcomes (Fischer, 1993), although Bruno and
Easterly (1998) and subsequent contributions emphasize that the relationship is ambiguous when inflation is
low to moderate.” [1] More recent contributions, and studies using more direct measures of infrastructure,
have generally found a more positive impact of public capital on growth (Demetriades and Mamuneas, 2000;
Roller and Waverman, 2001; Calderon and Serven, 2004; Erget, Kozluk, and Sutherland, 2009).” [1]
While this work is interesting and suggestive, the orthodox explanation for the MIT is still that the cost
advantages in manufactured exports that once drove growth start to decline as unionization and cost of living
spurs wage increases in newly industrialized countries in comparison with lower-wage countries which then
become the new targets for investment and production. Middle income countries are then faced with new
challenges, including problems with social cohesion if wealth and poverty effects are not borne equally by all
sections of the populace, a large pool of urbanized young people in search of jobs, as well as millions who may
still live in misery and poverty, particularly in lagging regions which have not yet transitioned from agricultural
pursuits.[14]
However this does not explain how some countries have been able to continue or even accelerate
their growth trajectory and make the transition to high income status. There is a large literature on the
relationship between financial openness and growth (e.g. Grilli and Millesi-Feretti, 1195; Quinn, 1997;
Edwards, 2001) for example, but there is more going on than just the adjustment of the cost of factors of
5
production given changes in the international division of labour and labour cost adjustments across countries
and regions. As Felipe, Abdon and Kumar have argued “We view today’s development problem as one of how
to accumulate productive capabilities and to be able to express them in 1) a more diversified export basket
and; 2) in products that require more capabilities (i.e. more complex).” [33] This suggests that a significant
part of the MIT story lies in education10 and human resource capabilities linked to technological change and
advanced consumer and production industries and processes. This is at least in part a story about learning and
the specific mechanisms – such as mimicry and institutional isomorphism – which have brought countries into
the midddle income ranks but which are not capable of bringing them further into the ranks of the high
income nations.
The Role of Innovation and Learning in Creating, and Overcoming, the MIT
In understanding why one middle income country might succeed while another might fail to
transition, it is necessary to remember what MIT is: “a stable, low-growth economic equilibria where talent is
misallocated and innovation stagnates.” (Agenor, Canuto and Jelinic’s 2012, p. 1)11 This shifts the analysis
away from simple factors of production arguments about the nature and origins of the MIT to those linked to
learning and innovation. Searching for the reasons why some countries fail to learn and innovate is a more
promising direction to follow than focussing on trade or investment relations and patterns in a more or less
open world economic system or upon the demographic aspects of what are more often effects of MIT rather
than causes.
One way the MIT literature seeks to explain this phenomena, for example, is to argue that ‘middle
income’ is a development stage that characterizes countries that are squeezed between low-wage producers
and highly skilled and fast-moving innovators. Many middle-income countries tend to make two common
mistakes: either they cling too long to past successful policies, or they exit prematurely from the industries
that could have served as the basis for their specialization process (Agénor and Canuto 2012; Aiyar et al. 2013;
Eichengreen, Park, and Shin 2013; Felipe 2012; Gill and Kharas 2007; Nungsari and Zeufack 2009; OECD 2007).
In this view timing and smooth transitions between industries and specializations are two keys to success. [14]
This is a powerful explanation, as for instance, it underscores the significance of events such as wars
or crises which prevent such transitions from occurring and sometimes result in a lagged or stepped pattern of
development (for example Korea after the Korean war, or other countries after years of non-innovating
dictatorships e.g. Spain, Portugal or Greece). Capital inflows, for example, have classically been regarded as
conducive to growth, allowing capital to be allocated to wherever its marginal product is highest, besides
facilitating consumption smoothing and diversification of idiosyncratic income risk. But the “sudden stops”
literature pioneered by Calvo (1998) has emphasized that periods of surging capital inflows are sometimes
followed by a cessation or even reversal of the flow, with often severe repercussions. Recent evidence from
the global financial crisis suggests high domestic spillovers from reliance on cross-border banking flows
(Cetorelli and Goldberg, 2011; Aiyar, 2011, 2012). This is consistent with the “twin crises” literature
emphasizing that banking crises and sudden stops are often joined at the hip (Kaminsky and Reinhart, 1999;
Glick and Hutchinson, 2001).
Such shocks, however, may not affect long-term growth, they have been found to lower potential
output levels permanently, consistent with persistent – albeit temporary – impact on potential growth (Cerra
and Saxena, 2008). Such explanations require refinement if the reasons for growth, and stagnation, in
innovative behaviour are to be clearly understood.
6
Here it is useful to look at endogenous growth theory and problems with developing and
applying technology in national and regional innovation systems (Add more cites here, such as Soete, Edquist,
Nelson, Lunvall, Gibbins etc.).12 Such theories focus attention in explaining the MIT on understanding why
innovation would occur up to one point and then stall.
Most endogenous growth theory focuses on the role played by government, industry and university
linkages in creating regional, national and trans-national innovation systems (NIS) which serve to create,
mobilize and utilize knowledge in production processes (Cites – Etzkowitz).13 Productivity increases are not
expected to simply occur by magic or automatically but crucially depend on the nature, type and effectiveness
of the innovation system in place in a jurisdiction and its ability to either create or adapt knowledge towards
product and process innovation and enhanced productivity (WOLFE AND GERTLER, Neo-Schumpeterian
growth theory)14. Governments can play a critical role in steering or directing such activity or even undertaking
relevant R&D on its own or as part of a public-private innovation system.15
As Felipe, Abdon and Kumar have argued, if we “compare the exports of countries in the middle
income trap with those of countries that graduated. The results indicate that: 1) countries that made it into
the upper-middle income group had a more diversified, sophisticated, and non-standard export basket at the
time they were about to jump than those in the lower-middle-income trap today; 2) countries that have
attained upper-middle-income status had more opportunities for structural transformation at the time of the
transition than countries that are today in the lower-middle-income trap; 3) countries in the upper-middleincome trap are less diversified, are exporters of more standard products, and had fewer opportunities for
further structural transformation than the countries that made it into the high-income group.” [33]
This focuses attention on how countries learn and utilize knowledge in their production and
consumption processes. Not all knowledge has to be produced internally, of course, but can be imported
subject to barriers such as copyright protection, patents and other forms of intellectual property rights.
These serve as barriers to entry of middle-income countries to high income status and several routes
exist through which they may be overcome:
1. Developing own knowledge (Germany, USA)
2. Buying your way to the top – a middle income country which can afford to purchase or attract the
latest and best (Singapore?)
3. Adopting older free or less expensive technologies and knowledge and improving upon it
4. Cheating and stealing.
These strategies are ordered roughly by cost. Developing your own knowledge is a very expensive and
very time consuming project, requiring for example the development and staffing of university systems which
can take many generations to flourish. Buying leading edge knowledge means paying premium prices. And
cheating and stealing invokes penalties and restrictions which many countries cannot withstand.
That leaves no. 3 as the only practical course open to many countries and it is the arguments of this
paper that it is this strategy which leaves many countries trapped at the middle-income level and unable to
make the transition to a higher level. This thesis is explored below in the cases of Thailand, Korea and China,
examples of three countries which followed different learning paths.
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Comparative Economic Performance: Thailand, Korea, China
Thailand, South Korea and China (along with Hong Kong, Indonesia, Japan, Malaysia, Singapore, and
Taiwan) are the “miracle” Asian economies of the late nineteenth century.
Source: Screenshot from Rajan (2011)
Of the countries in the list, it is the four NIEs - Hong Kong, Singapore, Taiwan and Thailand - that stand
out for sustained economic growth over five decades (Japan’s growth is less remarkable because it was
already a developed economy that had been battered by War). The above graph shows that Indonesia,
Malaysia, and Thailand have not fared well since the outbreak of the economic crisis in 1997.
An important factor explaining the “economic miracle” was the heavy interventionist role of the
government in guiding economic development. While the details varied substantially, most of these
governments used a combination of industrial policies throughout their development process; first with
import industrialization substitution that protected domestic firms and promoted infant industries, and
second, export promotion that provided financial incentives to firms that actively sold their products in foreign
markets.
Thailand’s per capita GDP was similar to South Korea’s during the 1960s but the latter had pulled far
ahead by the 1970s and the difference deepened in the following decade. The difference became particularly
pronounced in the 2000s, when Korea emerged from the crisis stronger while Thailand lagged. China’s growth
was even more spectacular: its per capital income was less than 1/4th the Thai level in 1980 but had caught up
with the latter by 2012.
Per Capita Economic Growth Rate
GDP Per Capita ,
Current US$
GNI per capita, PPP (current intl. $)
8
1960
1970
1980
China
250
Korea
155
279
2,340
Thailand
101
192
1,070
High income
8,512
Middle income
1,039
Low income
364
Source: World Development Indicators
1990
800
7,950
2,850
16,302
1,820
558
2000
2,350
17,110
4,880
24,463
3,017
695
2010
7,470
28,650
8,410
35,647
6,278
1,231
2012
9,040
30,970
9,280
38,325
7,172
1,375
Korea’s vastly superior performance is further confirmed by growth rates measured in terms of per
capita in constant $, as shown in the following graph. Thailand, on the other hand, grew at rate about average
for the middle income group.
GNI per capita, PPP (constant ),
1980-2012
Constant 2005 Intl $
30,010
25,010
20,010
China
15,010
Korea
10,010
Middle income
Thailand
5,010
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
10
Source: World Bank Development Indicators
The following graph confirms that while many Asian have grown rapidly in recent decades, the rate
was exceptional in the case of China, which took about 10 years to raise its per capita GDP from PPP$3,000 to
PPP$8,000, while the same took Taiwan and Korea about twice as much. It entered the 1980s well behind
Thailand but its per capita income surpassed its southern neighbour within three decades.
9
Source: Screenshot from Aiyar et al (2013)
The following graph on expenditures on research and development is revealing in that offers insights
into the different levels of resources being devoted to technological advancement. South Korea is now the
fourth largest spender on R&D, a remarkable achievement for a country that was known for imitation
products only a few decades ago. China’s performance is no less remarkable, having more than tripled the
share of GDP (which itself grew at a dizzying rate) it devotes to R&D and now ranks 24th in the world.
Thailand’s performance is middling, ranking 68th among all the countries in the world.
R&D Expenditures, % of GDP
2009
Rank
1
2
3
4
5
6
7
24
68
1996 2009
Israel
2.71 4.49
Finland
2.53 3.94
Sweden
3.60 3.60
Korea
2.42 3.56
Japan
2.77 3.36
Denmark
1.84 3.16
United States
2.55 2.91
European Union 1.76 2.04
China
0.57 1.70
Middle income 0.63 1.12
Thailand
0.12 0.25
Source: World Bank Development Indicators. http://data.worldbank.org/
China’s education indicators at the primary and secondary levels are superior to middle income
countries counterparts but are below the levels of developed countries. However, China is a diverse country
with vast areas for sub-par performance which is not captured in this nation-wide data.
10
The different levels of preparation for the modern economy is evident in these countries education
performance as well. Thus, public spending on education as percentage of GDP is 5 percentin Korea, 4 percent
in China and 3.8 in Thailand. While Korea’s public spending is lower than the average for High Income
countries, its total (public and private) education expenditure of 8.0 of GDP is higher than the OECD average
of 6.2 percent. http://www.oecd.org/education/EAG2012%20-%20Country%20note%20-%20Korea.pdf In
terms of enrolment, however, both China and Thailand fare poorly at secondary and tertiary levels. Korea, on
the other hand, is a league of its own, with universal enrolment.
Education Statistics, %
1980
1.9
4.9
3.5
..
2.6
114.1
101.9
105.2
99.0
96.0
43.7
87.5
76.8
40.7
27.7
1.1
34.8
12.8
6.4
10.3
2010
4.0*
5.6
5.0
4.8
3.8
128.9
102.8
103.2
107.5
96.7
83.1
100.2
97.1
70.8
83.5
23.3
73.0
101.0
24.9
50.0
China
High income
Public spending on
Korea
education, total (% of GDP)
Middle income
Thailand
China
High income
School enrolment, primary
Korea
(% gross)Thus
Middle income
Thailand
China
High income
School enrolment, secondary
Korea
(% gross)
Middle income
Thailand
China
High income
School enrolment, tertiary
Korea
(% gross)
Middle income
Thailand
Source: World Bank Development Indicators
* 2012 http://news.xinhuanet.com/english/china/2013-05/08/c_132367942.htm
If income distribution affects economic performance at higher levels of development, then China and
Thailand have a difficult challenge facing them. China has climbed from being a reasonably equal country in
the 1990s to one highly unequal within a decade. Thailand currently has one of the most unequal distribution
of income in the world and the trends indicate further deterioration. Korea, on the other hand, is rather equal,
though its gini of 31 is considerably higher than the world leader Sweden at 31.
11
Gini Index
Recent Equality rank
late 1990s late 2000s (out of 139)
Sweden
23.00
1
Korea
31.59
31.10
27
China
35.70
47.40
109
Thailand 41.46
53.60
127
http://databank.worldbank.org/ , https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2172rank.html
Thailand: The Failure to Move Beyond Isomorphism and Emulation
“Thailand entered the modern age following the overthrow of monarchy in 1932. The new
government, led by the People’s Party, sought to distinguish itself from the ‘ancien regime’ by appealing to
economic nationalism. Criticizing the monarchy for giving away the country to foreigners, the new
government started to assert control over the economy by requiring businesses to register and to use the
Siamese language in their signboards and accounts (Coughlin, 1952).” [3; 93]
“In 1938, Phibun Songkram, who was heavily influenced by the German and Japanese modernization
models, took over the reins of power and aggressively launched the Thai-ification campaign. By the end of the
1940s, the newly created Ministry of Industry had taken over the textile and paper factories, previously run by
the military, while other agencies began to operate sugar mills, tobacco factories, and distilleries. By the mid1950s, the government had launched 100 manufacturing firms, producing glass, chemicals, cement, iron and
steel, and other products (Ingram, 1971; Hewison, 1989).” [3; 93] Domestic banks also grew during this period
under heavy government protection.
“By the end of the 1950s, Thailand’s industrialization strategy began to change for several reasons.
After grabbing power from Phibun in 1957 and imposing dictatorial rule, Sarit was casting around for a new
development model that would distinguish his government from its predecessor. Towards this end, the newly
installed Revolutionary Party guaranteed the private sector freedom from government competition and
expropriation. It also prohibited government guarantees for private-sector loans, as was the practice under
Phibun.” [3; 95]
The Sarit government ushered in a new era of emulation and isomorphism of development policies
and institutions that had worked elsewhere and were being pursued in other countries at the time, notably
the NIEs. The new government pursued an explicit strategy of supporting export-led industrialization. “It
passed the Promotion of Investment Act of 1960 and Promotion of Industrial Investment Act of 1962, which
expanded fiscal incentives for manufacturing activities while retaining the import bans and surcharges on
competing imports (Atchaka 1986; 12). [3; 96] The new set of industrial development policies also reflected
the Sarit’s regime’s more open attitude toward foreign investments. To attract foreign investors, it enacted
policies such as guarantees against nationalization, the repeal of the 1956 Labour Act, and the imposition of a
ban on strikes and union organizing.” [3; 96]
“The economy in the 1960s grew quite rapidly. The share of value-added in manufacturing rose from
10 percent in 1951 to 15 percent in 1968, with the largest increase coming from food processing and rice
milling. Agriculture, still the biggest industry at that time, added new exports such as maize and cassava, while
consumer goods industries were led by beverages, tobacco, textiles, and apparel. Morever, the structure of
imports also began to shift away from consumer durables (food, beverage, tobacco) and towards intermediate
12
and capital manufacturing inputs. Calculating the impact of ISI based on the product’s degree of dependence
on imported inputs, one study found that ISI took place in almost all durable and non-durable consumer goods
industries, especially in footwear, leather products, textile goods, and wearing apparel manufacturing
(Narongchai, 1975; 261).” [3; 97]
“Studies (Atchaka, 1986; Samart 1989; Mounier et al. 994) point to the early 1970s as the start of
export-oriented industrialization. Nevertheless, export expansion began long before the Thai government
made it its main development thrust. From 1960 to 1972, manufactured exports increased five times, with
processed food, beverages, sugar, textile goods, cement, and basic industrial chemical among the growth
industries (Narongchai, 1975; 264). What demarcated this earlier period from 1972 and beyond was the shift
in the direction of Board of Investment (BOI) promotional activities toward export manufacturing activities
and the development of more liberal incentives for domestic and foreign investors.” [3; 97]
“In the fifth 5-year plan introduced in 1983, the government specially emphasized FDI and allowed
export companies to be fully owned by foreign investors. The Industrial Estate Authority of Thailand
constructed industrial estates and the first EPZ was established at Bangchan near Bangkok in 1970. The Lab
Krabang Industrial Estate was completed in 1979 as an EPZ and was filled up by 1987. In addition, the
government divided the country into three regions and encouraged investment in specific areas.” [8]
“From 1987, Thailand began achieving high economic growth rates of 9.5 percent, 13.3 percent, 12.3
percent, and 11.6 percent respectively. However, the high rates of economic growth exposed various
problems in the Thai economy, including infrastructure deficiencies, human resource shortages, an income
gap between urban and rural villages and the need to promote small businesses.” [8]
The steady economic growth of the past two decades came to an abrupt halt in June 1997 with the
outbreak of the Baht crisis that rapidly engulfed the entire region. GDP shrunk by 10 percent while
unemployment tripled, causing widespread economic and social hardship. While economic growth recovered
in the following years, it never recovered to the levels experienced in the early 1990s.
Two main economic hypotheses explaining the crisis emerged in the aftermath of the Financial Crisis.
“According to one view, sudden shifts in market expectations and overconfidence were the key sources of the
financial turmoil. [9] According to the other view, the crisis reflected structural and policy distortions in the
countries of the region. Fundamental imbalances triggered the crisis in 1997, even if, once the crisis started,
market overreaction and herding caused the plunge of exchange rates, asset prices, and economic activity to
be more severe than warranted by the initial weak economic conditions.” [9]
Regardless of the actual causes that triggered the 1997 crisis, recent commentators have pointed to
political-economic reasons for explaining the sluggish growth rate in the fifteen years following the crisis.
The strength of political institutions and stability of the government are key conditions for rising
above middle income level. In the case of Thailand, political turmoil has robbed the country of policy direction
and stable conditions necessary for economic growth. The massive election victory of Thaksin in 2001 and
again in 2005 briefly suggested a new era of stable politics in Thailand. But it did not last, following military
coup in 2006 and internecine political conflicts since.
“All this means that state-driven investments and economic overhauls have become more important
for Thailand’s ability to shore up growth and preserve its competitive edge. Plans to roll out anti-flooding
projects and spend 2 trillion baht on high-speed rail lines and other infrastructure projects were approved by
Parliament last year but the political standoff means that there will be long delays.” [19]
NEED TO LINK THIS TO LEARNING BY EMULATION AND ITS LIMITS
13
South Korea: The Transitions to a High Level NIS
After a decade of turmoil and policy drift during the 1950s, Korea embarked on a determined exportled development during the 1960s. The strategy used a combination of tariffs and import quotas to protect
infant industries and export subsidies, preferential loans, tariff reductions on product inputs, low exchange
rates, and export processing zones to support domestic industries grow, then become competitive on the
global market. [5] The government sought to reduce anti-export bias not via import liberalization (the
orthodoxy) but through selective subsidizations of exports. [6] It was influenced by Japan’s growth strategy of
state-led economic development. Included: 1) Economic Planning Board, which created 5-year plans; 2)
Nationalized commercial banks; 3) Bank of Korea placed under the control of the Ministry of Finance; [6]
There was also heavy investments in infrastructure – road, rail, ports, and power generation; [6]
The government followed a careful “sequencing” of development policies:




First 5-year plan (1962-1966) placed priority on simple consumer exports
Second 5-yer plan (1967-1971) consumer exports and replacement of intermediate goods imports
with domestic goods
Third (1972-1976) industrialization centred on heavy and chemical industries
Fourth (1977-1981) development of knowledge and information-intensive industries [8]
The ROK economy boomed through much of 1960s and 1970s but experienced negative growth in
1980. “The downturn came as a result of a combination of events, including political turmoil after the
assassination of former President Park, the second oil shock of 1979, a bad rice harvest and rising foreign debt
due to overdependence on foreign loans. To improve the current account balance, the government
implemented measures to cool down excessive consumption resulting in a relatively low average annual
growth rate of 8.4 percent in the 1980s.” [8]
“In the next period (1984-1989), the ROK enjoyed an economic boom due to the “three lows”: a low
won, low oil prices, and low international interests rates. The depreciated won strengthened the
competitiveness of exports and the fall of crude oil-prices sharply reduced the cost of imports. In addition, low
international interest rates reduced the burden of interest payments on foreign debt, which stood at $48.8
billion at the end of 1985 (see Okuda, 1993). The external current account balance jumped from a $900
million deficit in 1985 to a $14.1 billion surplus in 1988 and the economy averaged annual growth of more
than 12 percent.” [8]
“A major characteristic of the ROK’s industrial policy was that there was little foreign investment, in
part because several domestic business groups (Chaebols) were providing the necessary entrepreneurship,
while the country used foreign loans to fund industrial development. Korean firms licenced and emulated
foreign technology rather than invite FDI.” [8]
“Although the ROK economy grew under heavy intervention and regulation, deregulation has driven
the policy discourse since 1993 (see Ishizaki, 1994). However, in view of the economy’s overdependence on a
group-centred structure, the administration of President Kim Ybung-sam judged that if deregulation were
implemented under existing conditions, chaebol domination would strengthen and other companies would be
put at greater disadvantage. So the administration devised a plan to open up corporate stock ownership wider
and spread out ownership of the Chaebols, as well as to limit inheritance and gift-giving, to mitigate
corporations’ dependency on borrowing, to limit mutual financial guarantees and to limit investment in
affiliated companies (Mizuno, 1993).” [8]
14
“South Korea has gone some way to dismantle the developmental state. This dismantling began in the
late 1980s, with the democratization and the discrediting of military rule – and by the same token, discrediting
of bureaucratic rule. Many Korean economists and public officials converted to neoliberal thinking. In fact
even Chaebols became champions of liberalization, as by the late 1980s they had reached the point of
organizational and technological sophistication where they saw the state as more of an obstacle than a help.”
[7]
Similar to Thailand, Korea was hit hard by the 1997 economic crisis. Deep economic and social policy
reforms were undertaken in the aftermath of the crisis. By 2001 the economy was back on track and there
was a spectacular growth in the following years, interrupted only by the Global Financial crisis of 2008.
“Only nine countries with a population of more than 10 million have successfully overcome the
middle-income trap and realized a per capita income of $40,000: the United States, Japan, Australia, the
Netherlands, Belgium, France, Canada, Germany and Sweden…. Italy, Spain and Greece are other countries
that remain stuck in the middle-income trap. Their growth rate fell after they realized the $30,000 per capita
income threshold because of many factors, including a weak manufacturing base; bad fiscal health; higher
imports than exports; and a birth rate and transparency index below the OECD average…. [To succeed, Korea]
needs to improve its service-sector productivity, which is less than half of manufacturing productivity,
according to the OECD. It also needs to raise the birth rate to at least 1.8. The country should also increase
transparency in doing business. Finally, it needs to increase the current employment-to-population ratio —
the proportion of the working-age population that is employed — from 64 percent to greater than 70 percent.
Hiking growth potential is also necessary.” [29]
China: Alternative Practices in NIS Development
“In 1978, China was one of the poorest countries in the world. The real per capita GDP in China was
only one-fortieth of the US level and one-tenth the Brazilian level. Since then, China’s real per capita GDP has
grown at an average rate exceeding 8 percent per year. As a result, China’s real per capital GDP is now almost
one-fifth the US level and at the same level as Brazil.” [32]
The average growth rate of real per capita GDP was a modest 3 percent a year before 1978 and an
average of over 8 percent in following decades [32] Deep economic trends suggest that China’s income will
continue to rise in the near and medium future.
“After the People’s Republic of China was established, the CCP government thought the most
effective way to speed up industrialization was by increasing investment in heavy industries such as steel,
concrete, and heavy machinery. China’s government mobilized the resources for investment by limiting
household consumption and setting low prices for agricultural goods so that forced savings and surpluses
extracted from the agricultural sector could be sued for investments in such industries.” [32] “This strategy of
extensive growth based so heavily on capital accumulation was not sustainable and had grave welfare
consequences. The big push towards industrialization during the Great Leap Forward (1958-60) not only failed
to raise the GDP growth rate, it also had such a disruptive effect on agricultural production that a severe
famine occurred when China was hit by adverse weather shocks in 1959 (Li and Yang 2005).” [32]
“When the Cultural Revolution ended after the death of the Communist Party chairman Mao Zedong
in 1976, the Chinese government under the leadership of Deng Xiaoping sought to increase its legitimacy by
improving aggregate economic performance and raising living standards. In December 1978, the government
decided on a general policy of Gaige Kaifang, or “reform and opening up.” [32] “There were two important
reforms. First, the government increased prices for agricultural goods. Second, the previous “collective
15
farming system” was shifted to the “household responsibility system.” Under the new system, each farm
household was assigned a fixed quota of grains that the household had to sell to the govern ment at official
prices. However, any extra grain the household produced could be sold at market prices.” [32]
“As a result, total factor productivity in the agricultural sector grew by 5.62 percent per year between
1978 and 1984 and China’s agricultural output increased by 47 percent during this period. The increase in
food availability alleviated China’s subsistence food constraint and started a structural transformation that
reallocated a large amount of labor from agriculture to industry. From 1978 to 1984, agriculture’s share of
total employment fell from 69 percent to 50 percent: that is, in just six years, 19 percent of China’s labor force
– more than 49 million workers – reallocated out of the agricultural sector.” [32]
“In the early 1980s, encouraged by the successes of the rural reforms, the Chinese government
started two market reforms in the non-agricultural sector. First, a dual-track system was introduced. Stateowned enterprises were still given quotas on both production inputs and output that transacted at official
prices, but they were also allowed to buy inputs and sell output beyond quotas as market prices. Second, the
central government also devolved economic decision-making powers to lower-level governments and
provided them with fiscal incentives. Starting in 1980, a “fiscal contracting system” was implemented that
effectively made local governments the “residual claimants” of the enterprises under their control.” [32]
“Under these reforms, the township and village enterprises based on the old rural collective
flourished and led the way to an expansion of the non-state sector. The number of township and village
enterprises increase from 1,520,000 in 1978 to 18,880,000 in 1988 (NSB China 1999). The reforms did less for
state-owned enterprises. Local governments at county level and above south to improve the economic
performance of the state-owned enterprises under their control by implementing a “managerial responsibility
system” that linked managers and workers’ income to financial outcomes of the enterprises. The reforms did
have some positive effect on productivity. Li (1997) estimates that their TFP on average grew at 4.68 percent
per year between 1980 and 1989, and that most of the productivity growth could be attributed to stronger
incentives, increased market competition, and better allocation of production inputs.” [32]
“The “reform without losers” strategy (letting the non-state sector grow without downsizing the state
sector) posed tradeoffs. In the absence of hard budget constraints and market discipline, the state-owned
enterprises continued to be outperformed by the non-state sector. Between 1988 and 1998, the average
annual growth rate of TFP in the state sector was only 0.27 percent, while the comparable growth rate of the
non-state sector was 2.17 percent. Faced with increasing competition from the more efficient non-state firms
and without significant productivity growth, the financial condition of the state-owned firms deteriorated. By
1994, it had become clear that the strategy of “reform without losers” could no longer be sustained. In 1995,
the Chinese government reduced its commitment to stable employment in the state sector. Many small-scale
state-owned enterprises were allowed to go bankrupt or be privatized through management buyouts.” [32]
“The 15th Congress of the Chinese Communist Party held in 1997 was a milestone in China’s
economic policies. The Congress formally sanctioned ownership reforms of the state-owned firms and also
legalized the development of private enterprises; the reduction of legal barriers rapidly grew the number of
private enterprises. As part of the lead-up to China’s joining the WTO in 2001, China’s government also started
to cut tariffs, broadened trade rights, and liberalized its regime of foreign direct investment (Branstetter and
Lardy 2008). Between 1998 and 2007, the share of total urban employment in domestic private enterprises
and foreign-invested enterprises increased from 8 to 24 percent. The increase in the manufacturing sector
was even more pronounced. By 2007, domestic private enterprise alone accounted for 51 percent of total
urban employment in the manufacturing sector (NSB China, 2008).” [32]
16
Employment Share, GDP Share, and Total Factor Productivity Growth by Sector
Average annual total factor productivity growth (%)
Agriculture
Non-agricultural sector
Non-state
State
Aggregate
1978–2007
4.01
3.91
1.68
3.61
1978–1988
2.79
5.87
0.36
3.83
1988–1998
5.10
2.17
0.27
2.45
1998–2007
4.13
3.67
5.50
4.68
Employment share (%)
1978
69
15
16
100
2007
26
62
12
100
GDP share (%)
1978
28
27
45
100
2007
10
70
20
100
Source: Xiaodong Zhu (2012)
China’s continuous improvements in R&D and education are evident in its international standing. In
the OECD’s most recent round of the Program for International Student Assessment (PISA) in 2012, students
in Shanghai came first in the world in all categories: Math, Reading, and Science. It also had the largest
proportion of top-performing students: 25%. [36] While the results of this assessment don’t indicate the
standards in other regions or future trends, it does indicate that China (at least Shanghai) has developed
strong basics in educating its students to be prepared for further study in sciences and mathematics.
China’s performance is unimpressive in higher education though. Only 23 percent of tertiary
education age population in China are enrolled in 2011, compared to 73 percent on average in OECD, 100
percent in Korea, and 50 percent in Thailand.
Mimesis and Isomorphism as Innovation Strategies for Overcoming Middle Income trap
As these cases show, the lively discussion on the role of policy emulation and institutional
isomorphism have much insight to offer on the subject (Dimaggio and Powell [23]; Pritchett et al [24]) of the
MIT. The debate centres on the role of mimicry in development. However, instead of dwelling on whether
mimesis has positive [23] or negative [24] role in development, the relevant question for MIT analysis is if it
plays different roles at different stages of development. That is, purely policy and institutional-related
emulation can go a long way in facilitating countries’ ascent to the middle but then their usefulness tapers off,
requiring nations to innovate in different ways once the ‘low hanging fruit’ have been picked (Gerschenkron
CITES??).
This is because, as Pritchett and others (CITES) note, pure copying or memesis is a limited form of
learning which result in high productivity gains at early stages of development, but nations will need to go
beyond standardized ‘best practices’ if they are to achieve the next level of product and process innovations
required for the transition to high income status. Mimicry generates a static type of innovation system which
is unlike those in high income countries which rely on other kinds of learning to create innovative products
and systems and to move quickly in and out of niches as they appear, or, even better, create their own gravity
through creation of product demand (CITES). Memetic systems cannot do this by definition and therefore lead
to the middle income trap even when done well.
17
Among the three countries discussed here, Thailand has the clearest case for being stuck in a
development track. Many of the necessary conditions for overcoming the track are absent from the country: a
sound education system, investment in R&D, and political stability. There is a lot that Thailand can do merely
to learn from other countries that have succeeded in overcoming MIT. While it cannot simply copy Korea and
China’s interventionist industrial policies because it lacks the supporting governance structures, it must
continue to find its industrial niches that are suitable for its cacophonous democracy. At the same time, it
needs to work on promoting political stability based on agreement on some core political values. The
opposition must recognize democratic outcomes, even when it loses. Respect for rule of law will not only
promote stability, it will boost investors’ confidence in the country.
South Korea is one of the success stories, but it too is finding it hard to break through the $30,000
mark, a fate shared with Greece, Portugal and Spain. The global economic slowdown since 2008 is partly
responsible for this but it also highlights that it is increasingly difficult as countries rise up the development
ladder. There is no formula that Korea can emulate for rising higher and must therefore develop its own
development formula.
China has done well since reforms began in the late 1970s but there is still plenty of scope for it to
learn from Korea. Since the late 1980s china has followed the development lessons offered by Japan and
Korea grounded in an active government heavily guiding economic development. “China’s large state-owned
enterprises can be likened to erstwhile Chaebols in the way they enjoy cozy monopolies and favorable
financing from state-owned banks that are themselves cosseted. But gradually they need to be exposed to
more competition.” [30] China has the opportunities to continue to progress up the development ladder by
continuing to create more technology-intensive products. But it must also continue to improve financial sector
stability, the rule of law, and clamp down on corruption, to name a few.
China has slightly higher average years of schooling at the secondary level than the median for
countries vulnerable to MIT. It also has a higher share of high-tech goods in exports and its research and
development expenditures are comparatively high. However, its services sector, which include some of the
most value-added industries and activities, is somewhat weak. The ADB identifies shortages of appropriate
human capital as an important explanation for the weakness of modern high value-added services in China.
“Lack of high quality human capital helps to explain why Malaysia and Thailand have become synonymous
with the middle income trap. The rapid expansion of secondary and then tertiary education helps to explain
Korea's successful transition from middle- to high-income status. Whether China can avoid the middle-income
trap will presumably depend, in part, on whether it develops an education system that successfully produces
graduates with skills that employers require.” [31]
Ultimately, policy variables such as technology and tertiary education, as well as institutions, matter as
determinants of long-run economic growth. In addition, this paper finds that while secondary education and
political institution turn out to be important for lower income countries, an emphasis on technology and
higher education appears to be effective in generating growth for the upper middle and high income countries
but not for the lower middle and low income countries.” [25].
Catching up to advanced economies’ living standards will ultimately require shifting from a
development model based on technology absorption to one that fosters innovation. Indeed, consistent with
their current development stage, most Asian MIEs are lagging behind advanced economies on various
innovation indicators such as the number of patents per capita or the degree of sophistication of their
exports. In particular, as Asian MIEs continue to develop, their governments will have a role to play in raising
R&D spending and tertiary education attainment, two key areas for innovation outcome. China appears to
outperform regional peers in the innovation area (its performance now compares with some of the advanced
economies in terms of both inputs – R&D spending – and outcomes – triadic patents – those filed
18
simultaneously in Europe, Japan, and the US – per capita) and is also catching up rapidly on tertiary education
enrolment.” [12] As Felipe, Abdon and Kumar argue, China “should urgently improve access to secondary
education and should implement income redistribution measures to develop high-teach industries, before
their demographic dividend expires. Income redistribution includes the narrowing of rural-urban income
disparities, benefits to low-income individuals, direct income transfers, vouchers of free provisions of
education and health-care, and so on.” [34]
Endnotes
1
Pierre-Richard Agénor, Otaviano Canuto, and Michael Jelenic, “Avoiding Middle-Income Growth
Traps” World Bank PREM Nov 2012 number 98 p 1-7
2
World Bank’s income country groups based on per capita GNI: low income, $1,035 or less; lower
middle income, $1,036 - $4,085; upper middle income, $4,086 - $12,615; and high income,$12,616 or more in
2012.
3
Aiyar, Shekhar, Romain Duval, Damien Put, Yiqun Wu, and Longmei Zhang (2013). Growth
Slowdowns and the Middle-Income Trap. IMF Working Paper. WP/13/71. March.
4
Although orthodox development theory had argued from Walt Rostow onwards (cf “Stages of
Economic Growth”) that countries do not necessarily have to move from one stage of development to another
in a linear fashion but can both ‘jump’ stages as well as fall-backwards or stagnate and these situations have
received a great deal of attention of late (e.g. Dutch disease or staples traps, Thatcherist critique of
Keynesianism and stagflation), surprise continues to be evidenced at such failures.
5
Arthur Lewis 1955. The Theory of Economic Growth. London: Allen and Unwin.
6
Amin, S. Accumulation on a World Scale. New York: Monthly Review, 1974; Arrighi, Giovanni. The
Long Twentieth Century: Money, Power, and the Origins of Our Times. London; New York: Verso, 2010.
7
Frank, A. G. Latin America: Underdevelopment or Revolution. London, 1970; Wallerstein, Immanuel
Maurice. World-Systems Analysis: An Introduction. Durham: Duke University Press, 2004.
8
Fröbel, Folker, Jürgen Heinrichs, and Otto Kreye. The New International Division of Labour: Structural
Unemployment in Industrialised Countries and Industrialisation in Developing Countries. Cambridge; New
York; Paris: Cambridge University Press ; Editions de la Maison des Sciences de l’Homme, 1980. Helleiner, Eric,
and Andreas Pickel. Economic Nationalism in a Globalizing World. Ithaca, N.Y.: Cornell University Press, 2005.
9
A recent study by Berg et al. (2012) finds a large and statistically significant association between
income inequality and growth duration’ i.e. a one-percentage point higher Gini decreases the expected length
of a growth spell by 11 and 15 percent.” [35]. “The authors’ quantitative analysis supports the Kuznets
hypothesis, and indicates that, although a low-income country can accelerate its economic growth with
worsening of income distribution as an engine, a middle income country would experience a decreasing
growth rate if it fails to narrow the income gap between the top and bottom income groups. A sensitivity
analysis for three Asian upper-middle-income countries (China, Malaysia, and Thailand) shows that the
situation related to a middle-income trap is worse than average in China and Malaysia.” [33]
10
The “human development” approach espoused by UNDP posits that “As low-income households
can les afford education and healthcare, they are less likely to engage in productivity driven industries.
Abundance of educated and healthy workers is key for the development of a high value added and
knowledge-based economy.” [34]
11
Pierre-Richard Agénor, Otaviano Canuto, and Michael Jelenic, “Avoiding Middle-Income Growth
Traps” World Bank PREM Nov 2012 number 98 p 1-7.
19
12
Clark, N., C. Juma, G. Dosi, C. Freeman, R. Nelson, G. Silverberg, and L. Soete. “Evolutionary Theories
in Economic Thought.” In Technical Change and Economic Theory, 197–218. London: Pinter, 1988.
Dosi, G., C. Freeman, R. Nelson, G. Silverberg, and L. Soete. Technical Change and Economic Theory.
London: Pinter, 1988.
———. “The Nature of the Innovative Process.” In Technical Change and Economic Theory, 221–38.
London: Pinter, 1988.
Dosi, G., L. Soete, and J. Niosi. “Technological Innovation and International Competitiveness.” In
Technology and National Competitiveness: Oligopoly, Technological Innovation and International Competition,
91–118. Montreal: McGill-Queen’s Press, 1991.
Freeman, C., J. Clark, and L. Soete. Unemployment and Technical Innovation: A Study of Long Waves
and Economic Development. London: Frances Pinter, 1982.
Freeman, C., C. Perez, G. Dosi, R. Nelson, G. Silverberg, and L. Soete. “Structural Crises of Adjustment:
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1988.
Lundvall, B., G. Dosi, C. Freeman, R. Nelson, G. Silverberg, and L. Soete. “Innovation as an Interactive
Rpocess: From User-Producer Interaction to the National System of Innovation.” In Technical Change and
Economic Theory, 349–69. London: Pinter, 1988.
Soete, L. “The Impact of Technological Innovation on International Trade Patterns: The Evidence
Reconsidered.” Research Policy 16 (1987): 101–30.
Nelson, R. R. High Technology Policies: A Five Nation Comparison. Washington: American Enterprise
Institute, 1984.
———. “Neoclassical vs. Evolutionary Theories of Economic Growth: Critique and Prospectus.” The
Economic Journal, no. December (1974): 886–905.
Nelson, R. R., and S. Winter. An Evolutionary Theory of Economic Change. Cambridge: Harvard
University Press, 1982.
Nelson, R. R., S. G. Winter, and H. L. Schuette. Technical Change in an Evolutionary Model. Institute of
Public Policy Studies discussion Paper no. 45, 1973.
13
Leydesdorff, L. “The Triple Helix: An Evolutionary Model of Innovations.” Research Policy 29 (2000):
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Etzkowitz, H., and L. Leydesdorff. “A Sociological Paradigm for Economic Development.” In New
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14
Mytelka, Lynn K., Haeli Goertzen, David A. Wolfe, and Matthew Lucas. “Learning, Innovation and
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Wolfe, David A., and Matthew Lucas. “Introduction: Clusters in a Cold Climate.” In Clusters in a Cold
Climate, 1–10. Montreal: McGill Queens University Press, 2004.
15
Niosi, J. “Complexity and Path Dependence in Biotechnology Innovation Systems.” Industrial and
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———. Technology and National Competitiveness: Oligopoly, Technological Innovation and
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20
Nelson, R. R., and N. Rosenberg. “Technical Innovation and National Systems.” In National Innovation
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Presentation Outline
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The concept and dimensions of middle income trap (MIT)
Why did Thailand get stuck?
- Economic policies unchanged since the mid-1990s
- Inadequate education and R&D policies
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- Fractious politics and political environment
How has Korea fared?
And China?
What would it take Thailand to break the barrier?
Is China the next Korea or Thailand?