Helmut Wagner

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• Prof. Dr.
• Chair at University of Hagen

Analyzes China’s economic development and provides a forward-looking perspective on its future trajectory Examines Xi Jinping's economic reform agenda, highlighting its underlying motivations and wider implications Describes China's emerging problems and how the West and multinationals can respond to them

The English translation will be published by Springer Nature in June or July 2025. This book examines China's path from a geopolitically insignificant country to an economic superpower. It analyses the decisive reforms and their impact on China and the West. The focus is on current problems such as slowing economic growth and geopolitical tensions...

This paper investigates nonlinearities in the inflation-inequality relationship using a dynamic threshold panel data model and data for 101 countries over the period 1985–2020. We find that inflation rates exceeding 6% are associated with higher income inequality whereas below this threshold, the correlation remains insignificant. From a monetary p...

This paper investigates the human capital convergence dynamics within China over the period 1985–2018 using a nonlinear dynamic factor model. Our results indicate that there exist multiple human capital clubs, and the heterogeneity between those clusters is increasing over time. Moreover, we detect a core–periphery division with several provinces l...

While institutions are said to be poor in China in cross-country comparison, recent research indicates that at the provincial level, institutional quality plays in fact an important role for the economic success of a province, municipality, or autonomous region in China. Our paper aims to add further arguments to this discussion by focusing on the...

We analyze and compare the patterns of economic growth and development in China, South Korea, and Japan in the post-war period. The geographical proximity and cultural affinity between the three countries, as well as the key role of the development state in their economies, suggest that an analytical comparison would be a meaningful and valuable ex...

Recent research shows that schooling is not the same as learning. Still, the mean school years are the standard metric of education-based human capital. We propose a new database on the learning-adjusted years of schooling (LAYS) over the period 1995–2015 by using the World Bank (2018) methodology. The LAYS combine measures of school quantity and s...

In the 1960s, about two decades after Japan’s economic takeoff, also South Korea underwent a period of extended growth and managed to rise to the ranks of high-income countries. This Chapter sheds light on the factors that enabled the “Miracle on the Han River”. It analyzes the South Korean export promotion strategy as well as the subsequent HCI dr...

Japan was the first of the East Asian countries that succeeded in joining the club of advanced economies, and the Japanese development strategy has provided important lessons for other East Asian countries. This Chapter traces the history of Japan’s development from the Middle Ages to modern times. In this way, it aims to uncover the historical bac...

This chapter focuses on the challenges that Japan, South Korea and China are currently facing and will face in the following decades. After a brief look at where East Asia stands today and the recent policy course, this Chapter first addresses the general challenges that affect all countries globally (demographic, climate, digital, structural, and...

China presents probably the most astonishing growth miracle in modern world history. This chapter shows how China has developed, starting from the Middle Ages to the present with a special focus on the “Reform and Open-door Policy” under Deng Xiaoping from 1978 onwards. Before outlining individual reforms, this chapter analyzes the special characte...

In light of the growing global economic importance of East Asia, this book analyzes and compares the extraordinary development paths and strategies of Japan, South Korea, and China. It examines both the factors that enabled these countries’ prolonged periods of high-speed economic growth, and the reasons for their subsequent “cool-downs.” In additi...

This chapter compares the development processes in Japan, South Korea and China presented in detail in the previous chapters. Glawe and Wagner first identify the commonalities in the development of the three countries and elaborate on whether these commonalities justify speaking of a special “East Asian development model”. In order to come to a bal...

Trilemma situations, which have long been the subject of lively discussion in economics in many fields, indicate risks of instability and unsustainability. This article shows that China has also been facing a political-economy trilemma (and thus the ongoing danger of unsustainability of its development strategies) for 70 years now and has reacted d...

The European integration process started with the aim of reducing the differences in income and/or living standards between the participating countries over time. To achieve this, a certain alignment of institutions and structures was seen as a necessary precondition. While the goal of this income and institutional convergence was successfully achi...

Convergence in institutions and in per capita income across the European Union (EU) Member States are key goals of the European integrations process. Especially in the course of the various EU enlargement waves starting in 2004, it was intensively discussed whether institutional and structural homogeneity are necessary preconditions for real conver...

We study the effects of external shocks on the business cycle in China and its sectors (agriculture, industry, and services) in terms of real GDP growth using several small‐dimensional VAR models with Cholesky identification for the period 1996–2014. We show that China—in particular its industrial sector—is susceptible to shocks, which can be relat...

The European integration process started with the aim of reducing the differences in income and/or living standards between the participating countries over time. To achieve this, a certain alignment of institutions and structures was seen as a necessary precondition. While the goal of this income and institutional convergence was successfully achi...

Trilemma situations, which have long been the subject of lively discussion in economics in many fields, indicate risks of instability and unsustainability. This paper shows that China has also been facing a political-economy trilemma (and thus the ongoing danger of unsustainability of its development strategies) for 70 years now and has reacted dif...

We modify the concept of the middle-income trap (MIT) against the background of the Fourth Industrial Revolution and the (future) challenges of automation (creating the concept of the “MIT 2.0”) and discuss the implications for developing Asia. In particular, we analyze the impacts of automation, artificial intelligence, and digitalization on the g...

There is an ongoing debate within the economic growth and development literature whether institutions or human capital are more important for economic growth. We add further arguments to this discussion by focusing on a particular country, namely China. China is an interesting case study since it is often regarded as an exception by having achieved...

Over the last decade, a growing body of literature dealing with the phenomenon of the “middle-income trap” (MIT) has emerged. The term MIT usually refers to countries that have experienced rapid growth and thus reached the status of a middle-income country (MIC) in a very short period of time, but have not been able to further catch up with the gro...

The topography of China’s financial network is unique. Is it also uniquely robust to contagion? We explore this question using network theory. We find that networks that are more concentrated are less fragile when connectivity is low. However, they remain in a robust-yet-fragile state longer than decentralized networks, when connectivity is increas...

The positive link between good institutions and economic development is well documented in the literature on the deep determinants of economic growth. Consequently, convergence in institutional quality should be a necessary precondition for income convergence; however, only recently, researchers started to investigate empirically the nature of inst...

Schooling is not the same as learning. Nonetheless, many cross-country studies still use the mean school years, that is, a purely quantitative measure, to control for human capital. Thus, they ignore that the learning outcomes of two countries can differ dramatically even if they have the same average years of schooling. The concept of the learning...

There is a significant body of literature arguing that institutional quality is the key for long run economic growth and development. While the majority of these studies are based on cross-country growth regressions, we focus on the institution-economic growth nexus within a particular country, namely China. China is often regarded as an exception...

China is currently experiencing a structural change toward tertiarization and an implied growth slowdown associated with it. The paper investigates whether this growth slowdown is merely cyclical or a negative trend, and further what China is doing or should do to avoid falling into a “middle- income trap,” a problem many emerging economies have ex...

This article summarizes the main characteristics of the two major Chinese growth strategies since 1978, namely the Deng strategy (named after Deng Xiaoping) between 1978 and 2011 and the Xi strategy (named after Xi Jinping) since 2012. After a brief description of both strategies, it analyzes in depth whether the respective reforms of the two strat...

Standard small-scale New Keynesian models (NKM) come with considerable output losses from moderate positive steady-state inflation when the long-run output-inflation relationship is derived from the microeconomic equations. We analyse 1. which trend-inflation-dependent parameter change might move the New Keynesian model's long-run Phillips curve (L...

One of the major topics in the nowadays developing countries is the question of the sustainability of their development strategies. While there are many economic arguments in the discussion of this topic, it seems that a system-theoretical analysis of the sustainability of development strategies is inevitable, since development dynamics are determi...

This paper applies the statistical concepts of σ-convergence and unconditional β‑convergence to institutional development within several country groups hierarchized to the degree of European integration (e.g., euro area). Two sets of indicators are employed to measure institutional development: first, the Worldwide Governance Indicators, and second...

Structural changes, i.e. long-run changes in the agriculture-manufacturing-servicesstructure, are a key property of growth and development processes with massive impacts on economy and society and are part of actual debates regarding policy in developing and developed economies. While traditional literature has attempted to explain structural chang...

China is currently experiencing a structural change toward tertiarization and an implied growth slowdown associated with it. The paper investigates whether this growth slowdown is merely cyclical or a negative trend, and further what China is doing or should do to avoid falling into a “middle-income trap,” a problem many emerging economies have exp...

In this article, we analyze to what extent the influence of housing market determinants and especially the credit market vary across countries and time. We do this by means of an international panel data set, consisting of quarterly data for 18 industrialized countries between 1975/01 and 2017/02. Moreover, we test whether our findings hold true wh...

We propose a system-theoretical model for analyzing the sustainability of (economic) growth and development. In particular, we set up a general dynamic system describing the dynamics of the economic and non-economic system (where the latter encompasses, e.g., the ecological, socio-cultural, and political subsystem), their interactions, the dynamics...

There is a significant body of literature arguing that institutional quality is the key for long run economic growth and development. While the majority of these studies are based on cross-country growth regression, in our paper, we focus on the institution-economic growth nexus within a particular country, namely China. China is often regarded as...

The so-called ‘deep determinants’ of economic growth and development (namely, geography, institutions, and integration) have been found to be decisive for the break out of stagnation and for explaining cross-country income differences by many empirical studies. However, so far, very little has been done to examine to which extent they are also cruc...

The fundamental, underlying factors of development are often neglected when analyzing the question why countries experience a growth slowdown at the middle-income range. Although these so-called ‘deep determinants’ such as geography and institutions have been found to be decisive for the break out of stagnation and for explaining cross-country inco...

Since 2010–2011, China’s economy has slowed considerably, raising concerns that the country could fall into the so-called “middle-income trap” (MIT). Obviously, an MIT in China would have serious negative consequences not only for the Chinese population but also for the world economy as a whole. We examine whether China is or will be in an MIT by f...

This paper offers a theoretical basis for the concept of rebalancing and applies it to China, where it is currently a topical issue. Rebalancing here means the correction of economic and social imbalances built up during industrialization. This correction is accompanied by a structural transformation towards a more inward- and consumption-driven gr...

China’s economy has been growing at a high rate for the past three decades. However, the current process of rebalancing from an investment- and manufacturing-led growth model toward a consumption- and service-led model is associated with decreasing growth rates. We show that China’s current state of structural change in terms of sectoral employment...

We analyze housing market boom and bust phases for 18 industrialized countries using quarterly data between 1975/1 and 2016/2, by applying the turning-point algorithm on detrended house-price series. For this purpose, we compare at first how boom and bust phases change when varying the minimum cycle length. In a second step, we derive boombust cycl...

Over the last decade, a growing body of literature dealing with the phenomenon of the “middle-income trap” (MIT) has emerged. The term MIT usually refers to countries that have experienced rapid growth and thus reached the status of a middle-income country (MIC) in a very short period of time, but have not been able to further catch up with the gro...

This paper summarizes the main characteristics of the two major Chinese growth strategies since 1978, namely the Deng strategy (named after Deng Xiaoping) between 1978 and 2011 and the Xi strategy (named after Xi Jinping) since 2012/13. After a brief description of both strategies, I analyze in depth whether the respective reforms of the two strate...

Artikel zu Middle-Income Trap in China, veröffentlicht in der Zeitschrift "Asia Bridge - Trends/Analysen!Strategien für Ihr Asiengeschäft"; Rubrik "Special China" in Aprilheft

The term middle-income trap (MIT) usually refers to countries that have experienced rapid growth and thus quickly reached middle-income status, but then failed to overcome that income range to further catch up to the developed countries. This paper surveys the MIT literature. It begins by laying out different approaches to defining the MIT and by p...

A small-scale New Keynesian model comes with considerable output losses from moderate positive steady-state inflation when the long-run output-inflation relationship is derived from the microeconomic equations. We analyse 1. whether allowing for parameter change with trend inflation might move the New Keynesian model's long-run Phillips curve (LRPC...

This paper investigates institutional development induced by European integration. We estimate a dynamic panel data model wherein institutional development is measured as positive changes in the Worldwide Governance Indicators, which are explained by the status of the European countries, for example, being a member of the euro area or an EU member...

We study the effects of external shocks on the business cycle in China and its sectors (agriculture, industry, and services) in terms of real GDP growth using several small dimensional VAR models with Cholesky identification for the period 1996-2014. We show that China - in particular its industrial sector - is susceptible to shocks, which can be r...

After two decades of very high economic growth rates, China has now reached the so-called mid-income range or ‘trap’, i.e. a development level where it has to expect slower economic growth rates (a ‘New Normal’) for the future. Associated with that is a structural change towards tertiarization which requires some fundamental rebalancing of China’s...

Recent literature studies structural change and aggregate dynamics in neoclassical multi-sector growth models. A central aspect of this literature is the explanation of " Kaldor-Kuznets-stylized-facts " , which state that massive structural change takes place while aggregate-dynamics are relatively stable in the long-run. We present a growth model...

It is argued that the European Union and the Eurozone in particular are only able to survive if they succeed in avoiding and/or overcoming real divergence and excessive macroeconomic disequilibria. The mainstream view in economics is that a monetary union is only efficient or rather sustainable if either there is a certain degree of structural homo...

This paper focuses on the challenges China is confronted with in the context of structural change. It first shows that the service sector in China is ‘relatively small’ compared with other developed and developing countries in their historical context of structural change. Then it discusses – against the background of the experiences of former emer...

This paper examines whether the governance of regulatory agencies – regulatory governance – is positively related to financial sector soundness. We model regulatory governance and financial stability as latent variables, using a structural equation modeling approach. We include a broad range of variables potentially relevant to financial stability,...

Recent literature studies structural change in neoclassical multi-sector growth models. The literature focuses on the analysis of dynamic equilibriums (“aggregate balanced growth paths”). We study the transitional dynamics of a multi-sector Ramsey-model with non-homothetic preferences and inter-sector technology disparity. We show that the model co...

The founders of the European Union and European Monetary Union ­foresaw or assumed that the monetary union would only be sustainable if there was a convergence of living standards across member countries, and that the endogenous convergence in living standards was only possible if there was sufficient institutional and structural convergence. Howev...

This paper examines whether the governance of regulatory agencies – regulatory governance – is positively related to financial sector soundness. We model regulatory governance and financial stability as latent variables, using a structural equation modeling approach. We include a broad range of variables potentially relevant to financial stability,...

Traditional structural change theories study the dynamics of inter-sector labour-reallocation in autarky models. We analyse how model-results change if open economy setting is assumed, where we focus on the impacts of intermediate trade in a multi-sector growth model with capital accumulation. We show that, when controlling for specialisation-effec...

Different goods are produced by different sectors in an economy. The fact that sectors use different production technologies is named technology-bias. The technology-bias is well documented and has important theoretical implications for economic growth and unemployment. We provide a theoretical model that explains the technology-bias and its develo...

The Kuznets-Kaldor stylized facts are one of the most striking empirical regularities of the development process in industrialized countries: While massive factor reallocation across technologically distinct sectors takes place, the aggregate ratios of the economy are quite stable. This implies that cross-technology factor reallocation has a relati...

Population-ageing is one of the traditional topics of development and growth theory and a key challenge to most modern societies. We focus on the following aspect: Population-ageing is associated with changes in demand-structure, since demand-patterns change with increasing age. This process induces structural changes (factor-reallocations across t...

This article deals critically with the call for a comprehensive harmonization of legal rules, against the background of the lessons from the recent financial crisis. Before coming to the topic of harmonization of legal rules, it first briefly deals with the question of why rules are necessary at all, and what the functions of rules are. Then it dea...

The recent financial crisis revealed some serious shortcomings in over-the-counter (OTC)-derivatives markets and renewed concerns about a possible destabilizing impact of derivatives trading in general and OTC derivatives trading in particular on financial market stability. In order to strengthen transparency in OTC derivatives markets and deploy p...

The financial crisis of 2007-09 revealed several flaws in the regulatory frameworks across the world. While there is a consensus on the need for regulatory reform, the focus of such a reform is much less clear. This paper argues that the improvement of regulatory governance arrangements should be a key building block of financial reform since the c...

-In this paper, a general overview regarding asset prices and monetary policy is given. First, the role for asset prices in the objective function of monetary policy is discussed. In this regard, a short overview regarding the possible inclusion of asset prices in the inflation measure is given and the role of financial stability in the objective f...