Xiaojing Zhang

About Xiaojing Zhang

Xiaojing Zhang, is a professor of economics and the Deputy Director-General of National Institution for Finance & Development, Chinese Academy of Social Sciences (CASS).
Author Archive | Xiaojing Zhang
Economics, Finance sector development, Poverty

Distortions, growth catch-up, and the middle-income trap

Distortions, growth catch-up, and the middle-income trap
In theory, a distortion refers to a departure from the perfect competitive equilibrium with no externalities and in which resources have been optimally allocated so that each economic agent maximizes his or her own welfare. Thus, distortions are closely associated with market imperfections. In reality, an economy with no distortions does not exist—both advanced and developing economies use government interventions, such as stabilization policies, development strategies, industrial policies, administrative regulations, and so forth, which can be viewed as distortions, broadly defined.