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Why Has China Succeeded-And Why It Will Continue To Do So

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Author Info

  • Jesus Felipe
  • Utsav Kumar
  • Norio Usui
  • Arnelyn Abdon

Abstract

The key factor underlying China’s fast development during the last 50 years is its ability to master and accumulate new and more complex capabilities, reflected in the increase in diversification and sophistication of its export basket. This accumulation was policy induced and not the result of the market, and began before 1979. Despite its many policy mistakes, if China had not proceeded this way, in all likelihood it would be a much poorer country today. During the last 50 years, China has acquired revealed comparative advantage in the export of both labor-intensive products (following its factor abundance) and sophisticated products, although the latter does not indicate that there was leapfrogging. Analysis of China’s current export opportunity set indicates that it is exceptionally well positioned (especially taking into account its income per capita) to continue learning and gaining revealed comparative advantage in the export of more sophisticated products. Given adequate policies, carefully thought-out and implemented reforms, and skillful management of constraints and risks, China has the potential to continue thriving. This does not mean, however, that high growth will continue indefinitely.

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Bibliographic Info

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_611.

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Date of creation: Aug 2010
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Handle: RePEc:lev:wrkpap:wp_611

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Web page: http://www.levyinstitute.org

Related research

Keywords: China; Capabilities; Diversification; Export-led Growth; Leapfrogging; Open Forest; Product Space; Sophistication;

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Cited by:
  1. Sandra Poncet & Felipe Starosta de Waldemar, 2012. "Export upgrading and growth: the prerequisite of domestic embeddedness," Working Papers 2012-26, CEPII research center.
  2. Felipe, Jesus & Kumar, Utsav & Abdon, Arnelyn, 2012. "Using capabilities to project growth, 2010–2030," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 153-166.
  3. Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2010. "As You Sow So Shall You Reap: From Capabilities to Opportunities," Economics Working Paper Archive wp_613, Levy Economics Institute.
  4. Ulimwengu, John M. & Badibanga, Thaddée, 2012. "The sophistication and diversification of the African agricultural sector: A product space approach," IFPRI discussion papers 1156, International Food Policy Research Institute (IFPRI).
  5. Arnelyn Abdon & Jesus Felipe, 2011. "The Product Space: What Does It Say About the Opportunities for Growth and Structural Transformation of Sub-Saharan Africa?," Economics Working Paper Archive wp_670, Levy Economics Institute.
  6. Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2010. "Exports, Capabilities, and Industrial Policy in India," Economics Working Paper Archive wp_638, Levy Economics Institute.
  7. Jesus Felipe, 2010. "Asia and the Global Crisis: Recovery Prospects and the Future," Economics Working Paper Archive wp_619, Levy Economics Institute.
  8. Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2010. "Using Capabilities to Project Growth, 2010-30," Economics Working Paper Archive wp_609, Levy Economics Institute.

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