The Condition for Becoming a Developed Country Is Apparently "Being Cornered"

The other day, I watched an interesting video on YouTube.

It was about a theory proposed by an American scholar on what allows a country to escape the “middle-income trap.” According to the theory, the key condition is whether that country has been backed into a corner.

The middle-income trap works like this.

A developing country first attracts foreign factories, earns money with cheap labor, and becomes reasonably well off.

But once wages rise, foreign companies quickly move to cheaper countries.

If the country cannot build its own industries at that point, its growth stops there.

To escape the trap, a country needs painful reforms that break up vested interests and rebuild how the nation works.

But a country that can now feed itself reasonably well has no desire to shed its own blood voluntarily.

“We’re doing fine as we are” is just human nature.

So which countries outside the West have escaped this trap?

Japan, South Korea, and Taiwan.

According to the video, these three share one thing: each faced an existential crisis.

In Japan’s case, the American “Black Ships” arrived in the 1850s and forced a country that had kept itself largely closed off for over two centuries to choose between two options: modernize or be colonized.

That is why Japan pulled off a reckless national overhaul that went as far as abolishing the samurai class altogether.

After World War II, South Korea had North Korea next door, and Taiwan had China.

If they had been content to remain subcontractors for foreign capital, their countries themselves might have disappeared.

It was precisely because of that sense of crisis that they could swallow painful reforms.

Applying It to China and India

Applying this “cornered theory” to China and India is quite interesting.

China meets the condition.

The United States has cut off its access to semiconductors, shut it out of key technologies, and pushed it into a situation where it must “do it ourselves or not survive.”

China is long past the stage of making money from foreign-owned factories, and it is now desperately trying, as a nation, to build its own technology.

India, on the other hand, looks like it will have a harder time.

It is being hyped with talk that “the next era belongs to India,” but its domestic market is huge, and it has no enemy that threatens the country’s very survival.

It does have border disputes with China and Pakistan, but not the kind of pressure that could overturn its system.

It looks likely to attract foreign investment, become reasonably prosperous, and then settle there.

A Developed Dictatorship? I’d Honestly Like to See That

If China really becomes a developed country, it will be something of a historic event.

Until now, the standard Western view has been: “As a country becomes richer, a middle class grows, and eventually it demands democracy.”

In fact, both South Korea and Taiwan were under military rule or one-party rule during their growth years, and became democracies as they grew richer.

There are also countries like Singapore and the oil-producing Gulf states, which are rich even though they can hardly be called democracies.

But a city-state or a country that earns its money from oil is a very different story from a nation of 1.4 billion people rising to the top through its own industries.

A major power that joins the ranks of developed countries with its own technology, while remaining a Communist one-party dictatorship.

There is no precedent.

For countries that carry the banner of democracy, it would be a nightmare. But as a bystander, I honestly want to see it.

We might get to witness the moment someone puts correction tape over the textbook line, “When countries become rich, they become democratic.”

The Happiness of Living Inside the Trap

Still, something bothers me here.

If a country needs an “enemy” or a “crisis” to become developed, then perhaps the countries that stopped at middle income were happy in their own way.

They don’t have to live in fear of foreign enemies, their people aren’t forced into reforms that draw blood, and they can live a relaxed life with moderate prosperity.

From the outside, it may look like a “trap,” but for the people inside, it may be a comfortable room.

What is ironic, though, is that the country pushing China into desperation is the United States.

The more the United States tries to hold back China’s rise by shutting it out of technology, the more China is cornered, and the more the conditions for escaping the trap fall into place.

And it was also the United States that sent the Black Ships to Japan.

Apparently, the United States has a real talent for raising its own rivals.