IDEAS home Printed from https://ideas.repec.org/p/pen/papers/04-042.html

How the Dragon Captured the World Export Markets: Outsourcing and Foreign Investment Lead the Way

Author

Listed:
  • F. Gerard Adams

    (Northeastern University)

  • Byron Gangnes

    (University of Hawaii at Manoa)

  • Yochanan Shachmurove

    (The City College of The City University of New York and the University of Pennsylvania)

Abstract

This paper explores several theories regarding how China has become highly successful in capturing world export markets. The paper concludes that increased competitiveness is dependant on, but not limited to several factors discussed in detail including, exchange rate undervaluation, low wage rates and excess labor resources. Direct foreign investment which enabled China to produce products that meet world market specifications, brought new technology and foreign management, played a key factor. Reasons for China’s advantage over other East Asian countries are explored. The merits and methods of various measures of China’s competitiveness and comparative competitiveness are also discussed.

Suggested Citation

  • F. Gerard Adams & Byron Gangnes & Yochanan Shachmurove, 2004. "How the Dragon Captured the World Export Markets: Outsourcing and Foreign Investment Lead the Way," PIER Working Paper Archive 04-042, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    • Handle: RePEc:pen:papers:04-042
    as

    Download full text from publisher

    File URL: https://economics.sas.upenn.edu/sites/default/files/filevault/working-papers/04-042.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Balassa, Bela, 1979. "The Changing Pattern of Comparative Advantage in Manufactured Goods," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 259-266, May.
    2. Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 327-368.
    3. Ronald W. Jones, 2000. "Globalization and the Theory of Input Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 026210086x, December.
    4. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    5. Hali J. Edison & John G. Fernald & Prakash Loungani, 1998. "Was China the first domino? assessing links between China and the rest of emerging Asia," International Finance Discussion Papers 604, Board of Governors of the Federal Reserve System (U.S.).
    6. Jan Voon & Ren Yue, 2003. "China-Asean Export Rivalry In The Us Market," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 8(2), pages 157-179.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wim Suyker & Henri de Groot, 2006. "China and the Dutch economy," CPB Document 127, CPB Netherlands Bureau for Economic Policy Analysis.
    2. David Greenaway & Aruneema Mahabir & Chris Milner, 2010. "Has China Displaced Other Asian Countries’ Exports?," Palgrave Macmillan Books, in: David Greenaway & Chris Milner & Shujie Yao (ed.), China and the World Economy, chapter 4, pages 60-90, Palgrave Macmillan.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. F. Gerard Adams & Byron Gangnes & Yochanan Shachmurove, 2006. "Why is China so Competitive? Measuring and Explaining China's Competitiveness," The World Economy, Wiley Blackwell, vol. 29(2), pages 95-122, February.
    2. Ozawa, Terutomo, 2003. "Pax Americana-led macro-clustering and flying-geese-style catch-up in East Asia: mechanisms of regionalized endogenous growth," Journal of Asian Economics, Elsevier, vol. 13(6), pages 699-713, January.
    3. Tri WIDODO, 2009. "Comparative Advantage: Theory, Empirical Measures And Case Studies," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 4, pages 57-82, November.
    4. Prema-chandra Athukorala, 2006. "Multinational Production Networks and the New Geo-economic Division of Labour in the Pacific Rim," Departmental Working Papers 2006-09, The Australian National University, Arndt-Corden Department of Economics.
    5. 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.
    6. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
    7. Bernardina Algieri & Antonio Aquino & Marianna Succurro, 2022. "Trade Specialisation and Changing Patterns of Comparative Advantages in Manufactured Goods," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(3), pages 607-667, November.
    8. Warda, Peter, 2013. "Labor Decomposition: A Firm Level Analysis on Import Quality and Labor Demand," Working Paper Series in Economics and Institutions of Innovation 322, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    9. Rauch, James E, 1991. "Reconciling the Pattern of Trade with the Pattern of Migration," American Economic Review, American Economic Association, vol. 81(4), pages 775-796, September.
    10. Russell Thomson & Prema-Chandra Athukorala, 2020. "Global production networks and the evolution of industrial capabilities: does production sharing warp the product space?," Oxford Economic Papers, Oxford University Press, vol. 72(3), pages 731-747.
    11. Cédric Brunelle, 2013. "The Growing Economic Specialization of Cities: Disentangling Industrial and Functional Dimensions in the Canadian Urban System, 1971–2006," Growth and Change, Wiley Blackwell, vol. 44(3), pages 443-473, September.
    12. Purba Mukerji, 2021. "A Panel Study of Factor Accumulation and Export Quality," JRFM, MDPI, vol. 14(9), pages 1-53, September.
    13. Moe, Espen, 2010. "Energy, industry and politics: Energy, vested interests, and long-term economic growth and development," Energy, Elsevier, vol. 35(4), pages 1730-1740.
    14. Chen, Hung-Ju, 2019. "Innovation and FDI: Does the Target of Intellectual Property Rights Matter?," MPRA Paper 94692, University Library of Munich, Germany.
    15. Fukao, Kyoji & 深尾, 京司 & フカオ, キョウジ & Ma, Debin & 馬, 徳斌 & Yuan, Tangjun, 2003. "International Comparison in Historical Perspective: Reconstructing the 1934-36 Benchmark Purchasing Power Parity for Japan, Korea and Taiwan," Discussion Paper Series a442, Institute of Economic Research, Hitotsubashi University.
    16. Iamsiraroj, Sasi, 2016. "The foreign direct investment–economic growth nexus," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 116-133.
    17. Simplice A. Asongu, 2019. "FDI in Selected Developing Countries: Evidence from Bundling and Unbundling Governance," Working Papers 19/057, European Xtramile Centre of African Studies (EXCAS).
    18. Spruk, Rok, 2012. "After 20 Years of Status Quo: The Failure of Gradualism in Slovenia’s Post-Socialist Transition," MPRA Paper 36304, University Library of Munich, Germany.
    19. Jan Fagerberg & Martin Srholec, 2017. "Global Dynamics, Capabilities and the Crisis," Economic Complexity and Evolution, in: Andreas Pyka & Uwe Cantner (ed.), Foundations of Economic Change, pages 83-106, Springer.
    20. Bourdin, Sebastien & Le Thiec, Anaïs & Elissalde, Bernard, 2009. "Le changement spatial dans l'industrie automobile en Europe centrale et orientale : entre effets d'héritage, cycles de vie et transition [Spatial change in the automotive industry in Central and Eastern Europe: between heritage effects, life cycle," MPRA Paper 44130, University Library of Munich, Germany.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F0 - International Economics - - General
    • F1 - International Economics - - Trade
    • P0 - Political Economy and Comparative Economic Systems - - General
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pen:papers:04-042. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Administrator (email available below). General contact details of provider: https://edirc.repec.org/data/deupaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.