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Institutional causes for the slowing transition, unemployment and unequal distribution

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Usually 65%–80% of the employment can be taken by small-andmedium- sized enterprises in a country. The more small-and-medium-sized enterprises are active in the economy, the higher proportion of the middle income classes in the population, and the lower proportion of the poor people caused by unemployment and under-employment. Therefore, without changing the policy inclination to support gigantic or large companies we cannot solve the problem of surplus on labor force, urban unemployment and gap of income distribution. Now we may face the danger of developing into “the Latin-America trap”. At present we should focus on institutional reform of the government and promote the development of small-and-medium-sized enterprises.


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