Dynamic Comparative Advantage: Implications for China
Over the last two decades the structure of the Chinese economy has transformed rapidly. The transformation has had a significant impact on other economies, particularly as Chinese exports maintain their global ascendance. The economic threats and opportunities posed by China will continue to change over time. Yet very little research has been conducted on the economic forces that spur the transformation of Chinaâ€™s economic structure. We present a model of the forces underpinning Chinaâ€™s evolving economy, investigating the determinants of Chinaâ€™s progression through key economic stages, including the initial transition from agriculture to manufacturing. To highlight the speed of structural transformation we analyze data from 1985-2003. Our forecasts suggest that while China currently has a comparative advantage in labor-intensive manufacturing, comparative advantage is likely to shift to capital-intensive industry early in the next decade.
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- Dowlinga, Malcolm & Cheang, Chia Tien, 2000. "Shifting comparative advantage in Asia: new tests of the "flying geese" model," Journal of Asian Economics, Elsevier, vol. 11(4), pages 443-463.
- Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
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