Industrial Development In Middle-income Economies Social Essay

INDUSTRIAL DEVELOPMENT IN MIDDLE-INCOME ECONOMIES
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Emerging economies are often entrapped in what policymakers and economists have defined as middle-income traps. Haggard (S. 2018) describes the middle-income trap as the slowing down or stalling after reaching the middle-income level. One of the major concerns has been on whether emerging economies can overcome this trend or jump directly to the next economic level. Different scholars have come up with theories explaining middle-income traps and what can be done to overcome this trend. This paper reviews some of the theories addressing middle-income traps with the goal of determining whether they are efficient in solving the middle-income trap in emerging economies.
Proponents of the marketcraft theory argue that markets are created through human interactions. They view markets as institutions established through social activities. In the Marketcraft Thesis, Vogel (2018, p. 2) denies the existence of free markets. He argues that “markets need rules to protect people and environment from collateral damage…” Vogel's primary argument is that the market can be controlled to promote the welfare of people. If this theory is correct, then the concept of free markets can be forcefully overcome when governments intervene to alleviate the situation. Everything in the market operates on rules and regulations. If governments can regulate stock markets, they can also monitor the economy by improving the economic outputs with the goal of lifting emerging economies from the middle-economic trap to the next level of development.
In the second chapter of Vogel’s book of market crafting, he argues that markets do not operate on laws and regulations alone. Emerging markets need to develop reforms in their policies with the goal of increasing economic outputs that propel them out of the middle-income traps. Vogel (S., 2018, p. 7) argues that a market is constituted by integrated systems such as banking, corporations, private developers, and labor markets. These systems are modifiable when they decide to pursue the interest of the country. Each of these systems purses independent interests that make the market work. For instance, corporations seek to maximize the shareholder value, just like the labor markets that defend the rights of workers. The government plays a hand in all of these entities. As a result, the government can modify its intervention and help the country overcome the middle-income trap.
The theory of political and economic liberalization proposes the role of wealthy employers in raising wage incomes with the goal of transforming the economic value of their countries. The primary argument that proponents of liberalization ma...