The Impact Of Multinational Behavior To Middle-income Trap Country’s Economic

The concept of middle-income trap has been firstly pointed out by the World Bank in east Asia economic update released in 2006:It refers to few middle-income economies do successful transformation into for high-income countries, these countries tend to fall into the economic growth stagnation, One the one hand, they cannot compete with low-income countries in terms of salary,; on the other hand, it is difficult to compete with rich countries in advanced high technology.According to the definition given by the Asian Development Bank, countries whose per capita GDP is less than $900 are called "low-income countries"; GDP per capita in the$900 to$3500, referred to as "low middle-income countries"; Per capita GDP between$3500 to$11000, is called "high middle income countries". China enjoying$3750 per capita GDP in 2009, has entered the rank of high income countries. Meanwhile, she has suffered such economic and social problems as a big income gap, corruption, unbalanced development between urban and rural areas, environmental pollution and ecological damage, and unequal public service. Thus, she has the possibility of being caught in the middle-income trap. Therefore, a study on the formation of middle-income trap, and a research on the way to avoid the trap, can be helpful to effectively maintain the continuity and stability of China’s economic growth.Traditional industrial organization theory think that the market behavior will produce different effects on market performance. This paper studies the formation of middle-income trap from the industrial organization perspective, holding that the long period of economy stagnating for typical trapped countries in Latin American is due to those large multinationals who have been mainly composed of their industry market structure, their lifelines of national economy.In the liberalization process of Latin American countries, foreign companies by cross-border mergers and acquisitions quickly occupy the Latin American market in financial services, automobile, telecommunication and other industries, and further more rapidly form oligopolistic market structure. Through pricing transfer, intermediate goods procurement, technical barriers, etc., corporate profits are transferred, income inequality is deteriorated, technique suffers faults and national trade deficit continues to expand. Ultimately their capital accumulation has been influenced, and they lack economic momentum. What’s more, being dependent on foreign countries, with low average annual economic growth rate and large gap in per capita disposable income, their consumer contribution to economic growth is difficult to play the role. All these lead them to the middle-income trap. So lessons should be drawn from Latin American countries. Our country should standardize the supervision and inspection on foreign mergers and acquisitions, support local businesses, enhance comprehensive competitiveness, and improve the social security avoid to a falling into the middle income trap.