Is China Blocking Developing Economies?

The US and other high-income countries have their own set of concerns about China’s role int the world economy–but the concerns for low- and middle-income countries may be even more severe. A standard way of thinking about the process of global economic development is as a sort of ladder. Low-income countries start out with economies that are heavy on agriculture and subsistence farming. However, they gradually take a step up into low-skill manufacturing (textiles is a classic example), and then with additional capital investment they can take another step into higher-skill manufacturing. As manufacturing displaces agriculture, their service economy begins to expand as well, and the service jobs in everything from logistics to health care, from finance to education, and the broad category called “professional and business services,” all expand as well. But what happens if the bottom step of the development ladder, the move into low-skilled manufacturing, is blocked by the presence of…