Leading Dragons phenomenon : new opportunities for catch-up in low-income countries
AbstractModern economic development is accompanied by the structural transformation from an agrarian to an industrial economy and occurs through a process of continuous industrial and technological upgrading. Since the 18th century, all countries that industrialized successfully in Europe, North America and East Asia followed their comparative advantage and leveraged the late-comer advantage to emulate the leader-follower flying geese pattern of industrial upgrading. The large dynamic emerging market countries such as China, India and Brazil are also engaged in industrial upgrading but with a critical difference. In particular, because of its sheer size, China has absorbed nearly all labor-intensive jobs and become the world’s largest exporter of labor-intensive products. The current view is that China’s dominance hinders poor countries from developing similar industries. The authors argue that industrial upgrading has increased wages and is causing China to graduate from labor-intensive to more capital- and technology-intensive industries. These industries will shed labor and create a huge opportunity for lower wage countries to start a phase of labor-intensive industrialization. This process, called the Leading Dragon Phenomenon, offers an unprecedented opportunity to low-income Sub-Saharan Africa where the industrial sector is underdeveloped and investment capital and entrepreneurial skills are leading constraints to manufacturing. It can seize the opportunity and resolve the constraints by attracting some of the OFDI flowing currently from China, India and Brazil into the manufacturing sectors of other developing countries. All low-income countries will compete but to catch the jobs spillover from China, the winner must implement credible economic development strategies that are consistent with its comparative advantage.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 6000.
Date of creation: 01 Mar 2012
Date of revision:
Economic Theory&Research; Emerging Markets; Achieving Shared Growth; Debt Markets; E-Business;
Other versions of this item:
- Vandana Chandra & Justin Yifu Lin & Yan Wang, 2013. "Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries," Asian Development Review, MIT Press, vol. 30(1), pages 52-84, March.
- B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-28 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert E. Lipsey & Eric D. Ramstetter & Magnus Blomstrom, 2000. "Outward FDI and Parent Exports and Employment: Japan, the United States, and Sweden," NBER Working Papers 7623, National Bureau of Economic Research, Inc.
- Allen J. Scott, 2009. "World Development Report 2009: reshaping economic geography," Journal of Economic Geography, Oxford University Press, vol. 9(4), pages 583-586, July.
- Yong Wang & Justin Yifu Lin & Jiandong Ju, 2010.
"Endowment Structure, Industrial Dynamics, and Economic Growth,"
2010 Meeting Papers
679, Society for Economic Dynamics.
- Ju, Jiandong & Lin, Justin Yifu & Wang, Yong, 2009. "Endowment structures, industrial dynamics, and economic growth," Policy Research Working Paper Series 5055, The World Bank.
- Robert J. Barro & Jong-Wha Lee, 2000.
"International Data on Educational Attainment: Updates and Implications,"
CID Working Papers
42, Center for International Development at Harvard University.
- Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-63, July.
- Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc.
- Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006.
"The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links,"
Journal of Economic Perspectives,
American Economic Association, vol. 20(3), pages 3-26, Summer.
- Steven J. Davis & R. Jason Faberman & John Haltiwanger, 2006. "The Flow Approach to Labor Markets: New Data Sources and Micro-Macro Links," NBER Working Papers 12167, National Bureau of Economic Research, Inc.
- Huang Yiping & Jiang Tingsong, 2010. "What Does the Lewis Turning Point Mean for China? A Computable General Equilibrium Analysis," Macroeconomics Working Papers 22718, East Asian Bureau of Economic Research.
- Harrison, Ann & Rodríguez-Clare, Andrés, 2010.
"Trade, Foreign Investment, and Industrial Policy for Developing Countries,"
Handbook of Development Economics,
- Ann Harrison & Andrés Rodríguez-Clare, 2009. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," NBER Working Papers 15261, National Bureau of Economic Research, Inc.
- Thomas Farole, 2011. "Special Economic Zones in Africa : Comparing Performance and Learning from Global Experience," World Bank Publications, The World Bank, number 2268, March.
- Justin Lin & Ha-Joon Chang, 2009. "Should Industrial Policy in Developing Countries Conform to Comparative Advantage or Defy it? A Debate Between Justin Lin and Ha-Joon Chang," Development Policy Review, Overseas Development Institute, vol. 27(5), pages 483-502, 09.
- Philip Schellekens, 2013. "A Changing China : Implications for Developing Countries," World Bank Other Operational Studies 16115, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.