Crossing the Growth Threshold: Service-Based Economy, Knowledge Process and Reshaping of Efﬁciency Model

5月 24, 2017

Yuan Fuhua (袁富华), Zhang Ping (张平), Liu Xiahui (刘霞辉) and Nan Yu (楠玉)

Institute of Economics, Chinese Academy of Social Sciences, Beijing, China

Abstract: The transition from middle-income to high-income stage is fraught with risks of

growth divergence. Economic transition is clouded by the following possibilities: (1) falling

share of industrial sector through industrial depression and weakening growth momentum

caused by the large urbanization costs; (2) the subordination of service sector as a result

of nearly irreversibly industrial professional, which falters the process of service sector

transition and upgrading; (3) inefﬁcient knowledge production allocation and human capital

upgrade due to the absence of incentivized compensation of knowledge consumption. We

suggest that a country should reshape its efﬁciency model by upgrading knowledge factor

and human capital as the pre-requisite. Given the dilemmas of transition, China should take

the factorization trend of service sector and reshape efﬁciency model through institutional

reform, ensuring that service sector will develop in tandem with industrial sector.

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JEL Classiﬁcation: C13, E20, O11