Why Has China Succeeded-And Why It Will Continue To Do So
AbstractThe 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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Date of creation: Aug 2010
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China; Capabilities; Diversification; Export-led Growth; Leapfrogging; Open Forest; Product Space; Sophistication;
Other versions of this item:
- Jesus Felipe & Utsav Kumar & Norio Usui & Arnelyn Abdon, 2013. "Why has China succeeded? And why it will continue to do so," Cambridge Journal of Economics, Oxford University Press, vol. 37(4), pages 791-818.
- O20 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - General
- O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-28 (All new papers)
- NEP-INT-2010-08-28 (International Trade)
- NEP-TRA-2010-08-28 (Transition Economics)
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