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

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

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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File URL: http://www.levyinstitute.org/pubs/wp_611.pdf
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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
Contact details of provider: Web page: http://www.levyinstitute.org

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