FGV discusses average income pitfalls at a seminar in Rio de Janeiro

25 November 2013

Many countries have achieved an average income level in recent decades, but few managed to join the group of developed countries. Known as average income trap, the phenomenon was the theme of a seminar at FGV last Friday, November 22nd - a partnership between the Brazilian Institute of Economics (FGV/IBRE) and the Institute of Latin American Studies at the Chinese Academy of Social Sciences (ILAS/CASS).

Based on reflections about their development experiences, Brazilian and Chinese experts discussed ways for both China and Brazil (major economies that have reached the average income) to complete the transition to development, given the challenges of growth and social inclusion. Brazil is to China as the Brazilian social indicators are to Chinese indicators, was commented at the opening of the event by the minister of Strategic Affairs Office of the Presidency of the Republic (SAE), Marcelo Neri, president of the Institute of Applied Economic Research (Ipea) and professor of FGV/EPGE - Brazilian School of Economics and Finance. IBRE's researcher, Lia Valls, further mentioned the low level of foreign investments in infrastructure and the low rate of labor productivity as the main Brazilian bottlenecks.

The Chinese reinforced the need to resume the path of opening and reform of the country, as agreed at the 18th Plenary Session of the Chinese Communist Party. In the evaluation by Chen Changsheng, director of the Macroeconomic Research Department of the Research Development Center of the State Council of China, the risks of the country falling into the average income trap are small, since China would have advantages such as an economic growth with the participation of workers, the possibility of continuing urbanization, a strategy of flexible reforms and skilled labor costs lower than that of other countries.

The book that inspired the event, Average Income Trap: Visions of Brazil and China - organized by IBRE's researchers, Lia Valls Pereira and Fernando Veloso, and the director of ILAS/CASS, Zheng Bingwen - was also launched at the end of the meeting.

For more information about the seminar, please visit IBRE's website (in Portuguese).

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