Forty years ago in December, Deng Xiaoping delivered his historic speech "Emancipate the mind, seeking truth from facts and unite as one to face the future." This triggered four decades of reforms that have transformed China into the world’s second largest economy. By some time in the next decade, China will be among the few countries in the world that will have transitioned from low income to high income status since World War II.
Understanding the path China traveled, the circumstances under which historical decisions were made, and their effects on the course of China’s economy will inform future decision makers. Increasingly, this reflection is important to the rest of the world as more and more countries see China as an example to emulate. At the 19th Party Congress in November 2017, China accepted this mantle for the first time since the onset of reforms.
In some ways, China’s reforms were fairly mainstream. The country opened up for trade and foreign investment, liberalized prices, diversified ownership, strengthened property rights, kept inflation under control, and maintained high savings and investment. But this is simplifying the reforms and obfuscates the essence of China’s reforms: the unique steps China took reforming its system are what makes its experience of interest (see the Annex). Its gradual approach to reform was in sharp contrast to Eastern Europe and the former Soviet Union. Although often compared, China and other transition countries were simply too different in terms of initial economic conditions, political development, and external environment.
Predominantly rural and among the poorest nations on earth, China was marred by the failure of the Great Leap Forward and the political disruptions during the Great Proletarian Cultural Revolution. Integration into the global economy was minimal. Industry was inefficient, but also far less concentrated than in Eastern Europe and the former Soviet Union. Perhaps most importantly, because China retained political continuity, the country could focus on an economic and social transition instead of a political one.
Comparison with much of the Latin American reforms also seems out of place. Brazil, Mexico and Argentina were far closer to a market-based system than China, and their reforms—liberalization and macroeconomic stability—were focused on macroeconomic stabilization, whereas China’s reforms aimed for a transformation of the economic system as a whole. So there is no need to juxtapose the “Washington Consensus” with a “Beijing Consensus:” the approaches taken served very different purposes indeed.
Income growth is not the sole aim of economic development. An equally important, albeit harder to quantify objective is a sense of progress for the entire community, and a confidence that prosperity is sustainable and shared equitably across society for the long term.
The Philippines is at a fork in the road. Despite good results on the growth front, trends observed in trade competitiveness, Global Value Chain (GVC) integration and product space evolution, send worrisome signals. The country has solid fundamentals and remarkable human assets to leapfrog into the 4th Industrial Revolution – where the distinction between goods and services have become obsolete. Yet it does not get the most out of this growth, especially with regards to long-term development prospects. In order to do so, the government will have to make the right policy choices.
The World Bank Group’s Open Learning Campus (OLC) launched a free Massive Open Online Course (MOOC) today — Policy Lessons from South Korea’s Development — through the edX platform, with approximately 7,000 global learners already registered. In this MOOC, prominent representatives of academic and research institutions in South Korea and the United States narrate a multi-faceted story of Korea’s economic growth.
Why focus on South Korea? South Korea's transformation from poverty to prosperity in just three decades was virtually miraculous. Indeed, by almost any measure, South Korea is one of the greatest development success stories. South Korea’s income per capita rose nearly 250 times, from a mere $110 in 1962 to $27,440 in 2015. This rapid growth was achieved despite geopolitical uncertainties and a lack of natural resources. Today, South Korea is a major exporter of products such as semiconductors, automobiles, telecommunications equipment, and ships.
There’s a good chance you work in the service sector. Services account for 17 million jobs in Thailand, or approximately 40 percent of the Thai labor force. It encompasses diverse industries such as tourism, retail, health, communications, transportation and many sought-after professions such as architects, engineers, lawyers and doctors. Many Thai parents aspire for their children to join the service sector, and the sector carries many of Thailand’s economic hopes and ambitions.
มีโอกาสสูงที่คุณทำงานอยู่ในภาคบริการ ประเทศไทยมีงานในภาคบริการถึง 17 ล้านตำแหน่งหรือร้อยละ 40 ของกำลังแรงงานไทย ภาคบริการครอบคลุมหลายอุตสาหกรรมทั้ง การท่องเที่ยว การค้าปลีก สุขภาพ การสื่อสาร การขนส่ง รวมถึงวิชาชีพที่เป็นที่ต้องการ อาทิ สถาปนิก วิศวกร นักกฎหมาย และแพทย์ พ่อแม่หลายคนหวังว่าลูกจะสามารถเข้าทำงานในภาคบริการซึ่งเป็นภาคที่ประเทศไทยได้ฝากความหวังด้านเศรษฐกิจและความมุ่งมั่นที่จะก้าวไปสู่ประเทศที่มีรายได้สูงไว้
ប្រព័ន្ធចាត់ថ្នាក់ថ្មីឆ្នាំនេះមានមូលដ្ឋានផ្អែកលើកម្រិតគោលដែល WBG បង្កើតឡើងក្នុងប្រព័ន្ធមួយមានប្រភពនៅក្នុងឯកសារឆ្នាំ1989 របស់ខ្លួន ដែលគូសបញ្ជាក់វីធីសាស្រ្តនេះ។ តារាងខាងក្រោមបង្ហាញកម្រិតផ្សេងគ្នានៃការចាត់ថ្នាក់ផ្អែកលើចំណូលជាតិដុល (GNI):
|កម្រិតគោល||GNI កក្កដា 2016|
|ចំណូលមធ្យមកម្រិតទាប||$1,026 - $4,035|
|ចំណូលមធ្យមកម្រិតខ្ពស់||$4,036 - $12,475|
In the past several decades Malaysia has witnessed strong economic growth and has become one of Asia’s newly industrialized countries. In one generation it transitioned successfully from low to upper-middle-income status, due in large part to outward looking policies, trade, and foreign direct investments (FDI) — which contributed to the successful diversification of the economy. Today, Malaysia faces the challenge of escaping the middle-income trap as its productivity slows and it becomes less competitive.
Free trade agreements (FTAs) such as the Trans-Pacific Partnership (TPP) and Malaysia EU-FTA bring the potential for greater market access for Malaysia. This new generation of free trade agreements offers opportunities for Malaysia to strengthen reforms beyond tariff reduction, covering commitments such as competition and investment policies, non-tariff measures, intellectual property rights, labour standards, and opening up government procurement for competition. With a market-friendly government and a strong track record of reforms, there are new opportunities for reinvigorating structural reforms to support private sector-led economic growth. Accelerating productivity growth is a key element of the 11th Malaysia Plan, which aims to bring Malaysia to high income status by 2020.
The success story means the Southeast Asian nation that overcame a vicious civil war now is classified as a lower-middle income economy by the World Bank Group (WBG).
The new classification this year is based on thresholds set by the WBG in a system with roots in a 1989 paper that outlined the methodology. The table below shows the different levels of classification based on Gross National Income (GNI):
|Threshold||GNI in July 2016|
|Lower-middle income||$1,026 - $4,035|
|Upper-middle income||$4,036 - $12,475|