Deviation Of The Optimal Financial Structure, Distortion Of The Optimal Industrial Structure And "Middle Income Trap"

The concept of "middle income trap" was put forward by the World Bank in 2007,Since then,it has become the focus of attention from all walks of life.What are the causes of the middle-income trap? How to overcome the middle-income trap? These problems have become the hot research direction of scholars.China's per capita GDP has reached $4000 in 2010.Therefore,China successfully transformed into a upper-middle-income country.In recent years,China's economic growth has slowed down obviously.China's economic growth will face up to the real threat of the "middle income trap".Lin Yifu put forward the theory of optimal financial structure,and he broadened the direction of the research on "middle income trap".The financial suppression and early-coming financial liberalization of the developing countries leading to the deviation of the optimal financial structure.The financial structure is not matched with the industrial structure,which seriously affect the economic development.Even some countries fall into the middle-income trapBased on the "middle income trap" and the theory of optimal financial structure,this paper theoretically analyses the mechanism among the deviation of financial structure,the distortion of industrial structure and the "middle income trap".In empirical analysis,this paper constructs indicators of "deviation of financial structure" and "distortion of industrial structure".Based on the 30-year cross-border panel data of 25 countries from 1987 to 2016,the relationship between them and "middle income trap" is empirically analyzed through OLS,Probit and Logit models.The theoretical analysis and empirical results strongly prove that the distortion of industrial structure and the deviation of optimal financial structure formed by a country's deviation from its factor endowment advantage which can promote the country to fall into the "middle income trap".At the same time,higher dependency ratio and inflation will create the risk of middle-income trap,and improving the level of technological innovation will help a country overcome the trap successfully.In the process of economic development at this stage,China should follow the factor endowment to develop advantageous industries,optimize the financial structure and perfect the financial system for upgrading industrial structure.We should strengthen the support of scientific research and the education.We should try our best to train innovative talents.It's the key to ensuring that China leaps over the middle-income trap.