IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/4799.html
   My bibliography  Save this paper

China's Integration with the World: Development as a Process of Learning and Industrial Upgrading

Author

Listed:
  • Yifu, Justin

    (The World Bank)

  • Wang, Yan

    (The World Bank)

Abstract

The process of development is full of uncertainties, especially if it is a process of transition from a planned economy to a market oriented one. Because of uncertainties and country specificity, development must be a process of learning, selective adaptation, and industrial upgrading. This paper attempts to distill lessons from China's reform and opening up process, and investigate the underlying reasons behind China's success in trade expansion and economic growth. From its beginnings with home-grown and second-best institutions, China has embarked on a long journey of reform, experimentation, and learning by doing. It is moving from a comparative advantage-defying strategy to a comparative advantage-following strategy. The country is catching up quickly through augmenting its factor endowments and upgrading industries; but this has been only partially successful. Although China is facing several difficult challenges -- including rising inequality, an industrial structure that is overly capital and energy intensive, and related environmental degradation -- it is better positioned to tackle them now than it was 30 years ago. This paper reviews the drivers behind China's learning and trade integration and provides both positive and negative lessons for developing countries with diverse natural endowments, especially those in Sub-Saharan Africa.

Suggested Citation

  • Yifu, Justin & Wang, Yan, 2009. "China's Integration with the World: Development as a Process of Learning and Industrial Upgrading," Policy Research Working Paper Series 4799, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4799
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2008/12/22/000158349_20081222162953/Rendered/PDF/WPS4799.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. C. Fred Bergsten & Bates Gill & Nicholas R. Lardy, 2006. "China: The Balance Sheet What the World Needs to Know Now about the Emerging Superpower," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa04648, July.
    2. Eswar Prasad & Shang-Jin Wei, 2007. "The Chinese Approach to Capital Inflows: Patterns and Possible Explanations," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 421-480, National Bureau of Economic Research, Inc.
    3. Nicholas R. Lardy, 2006. "China: Toward a Consumption-Driven Growth Path," Policy Briefs PB06-6, Peterson Institute for International Economics.
    4. Dani Rodrik, 2006. "What's So Special about China's Exports?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(5), pages 1-19, September.
    5. Peter Nolan, 1995. "Political Economy and the Reform of Stalinism: The Chinese Puzzle," Palgrave Macmillan Books, in: Ha-Joon Chang & Peter Nolan (ed.), The Transformation of the Communist Economies, chapter 14, pages 400-417, Palgrave Macmillan.
    6. McMillan, John & Whalley, John & Zhu, Lijing, 1989. "The Impact of China's Economic Reforms on Agricultural Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 781-807, August.
    7. J. Behrman & T.N. Srinivasan (ed.), 1995. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 3, number 3.
    8. Shaohua Chen & Martin Ravallion, 2010. "The Developing World is Poorer than We Thought, But No Less Successful in the Fight Against Poverty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(4), pages 1577-1625.
    9. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2008. "How Much of Chinese Exports is Really Made In China? Assessing Domestic Value-Added When Processing Trade is Pervasive," NBER Working Papers 14109, National Bureau of Economic Research, Inc.
    10. Mohamed A. El-Erian & Michael Spence, 2008. "Growth Strategies and Dynamics," World Bank Publications - Books, The World Bank Group, number 28006, December.
    11. Ramón E. López & Vinod Thomas & Yan Wang, 2008. "The Quality of Growth," World Bank Publications - Books, The World Bank Group, number 28198, December.
    12. Ravallion, Martin, 2009. "Are There Lessons for Africa from China's Success Against Poverty?," World Development, Elsevier, vol. 37(2), pages 303-313, February.
    13. J. Behrman & T.N. Srinivasan (ed.), 1995. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 3, number 4.
    14. Chen, Shaohua & Ravallion, Martin, 2008. "China is poorer than we thought, but no less successful in the fight against poverty," Policy Research Working Paper Series 4621, The World Bank.
    15. Woo Wing Thye, 1994. "The Art of Reforming Centrally Planned Economies: Comparing China, Poland, and Russia," Journal of Comparative Economics, Elsevier, vol. 18(3), pages 276-308, June.
    16. Dollar, David, 2008. "Lessons from China for Africa," Policy Research Working Paper Series 4531, The World Bank.
    17. Guofu Tan & Justin Yifu Lin, 1999. "Policy Burdens, Accountability, and the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 89(2), pages 426-431, May.
    18. Ravallion, Martin, 2007. "Geographic inequity in a decentralized anti-poverty program : a case study of China," Policy Research Working Paper Series 4303, The World Bank.
    19. Yifu Lin, Justin & Nugent, Jeffrey B., 1995. "Institutions and economic development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 38, pages 2301-2370, Elsevier.
    20. Wang, Yijiang, 1993. "Eastern Europe and China: Institutional development as a resource allocation problem," China Economic Review, Elsevier, vol. 4(1), pages 37-47.
    21. Zhao, Longyue & Wang, Yan, 2008. "Trade remedies and non-market economies : economic implications of the first US countervailing duty case on China," Policy Research Working Paper Series 4560, The World Bank.
    22. Justin Yifu Lin, Fang Cai, and Zhou Li, 1996. "The Lessons of China's Transition to a Market Economy," Cato Journal, Cato Journal, Cato Institute, vol. 16(2), pages 201-231, Fall.
    23. Deepak Bhattasali & Shantong Li & Will Martin, 2004. "China and the WTO : Accession, Policy Reform, and Poverty Reduction Strategies," World Bank Publications - Books, The World Bank Group, number 14920, December.
    24. Sachs, J.D. & Woo, W.T., 1994. "Structural Factors in the Economic Reforms of China, Eastern Europe and the Former Soviet Union," Papers 94-01, California Davis - Institute of Governmental Affairs.
    25. World Bank, 2008. "Global Economic Prospects 2008 : Technology Diffusion in the Developing World," World Bank Publications - Books, The World Bank Group, number 6335, December.
    26. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
    27. Justin Yifu Lin, 1989. "An Economic Theory of Institutional Change: Induced and Imposed Change," Cato Journal, Cato Journal, Cato Institute, vol. 9(1), pages 1-33, Spring/Su.
    28. Perkins, Dwight Heald, 1988. "Reforming China's Economic System," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 601-645, June.
    29. Peter Murrell, 1991. "Can Neoclassical Economics Underpin the Reform of Centrally Planned Economies?," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 59-76, Fall.
    30. Justin Yifu Lin, 2007. "Development and Transition : Idea, Strategy, and Viability," Development Economics Working Papers 22709, East Asian Bureau of Economic Research.
    31. Wen, Guanzhong James, 1993. "Total Factor Productivity Change in China's Farming Sector: 1952-1989," Economic Development and Cultural Change, University of Chicago Press, vol. 42(1), pages 1-41, October.
    Full references (including those not matched with items on IDEAS)

    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. Justin Yifu Lin & Yan Wang, 2012. "China'S Integration With The World: Development As A Process Of Learning And Industrial Upgrading," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 1-33.
    2. ., 2013. "The Needham Puzzle, the Weber Question and China's Miracle: Long Term Performance since the Sung Dynasty," Chapters, in: D. S.P. Rao & Bart van Ark (ed.), World Economic Performance, chapter 3, pages 42-87, Edward Elgar Publishing.
    3. Alan de Brauw & Jikun Huang & Scott Rozelle, "undated". "Sequencing and the Success of Gradualism: Empirical Evidence from China's Agricultural Reform," Center for Development Economics 173, Department of Economics, Williams College.
    4. John Knight & Sai Ding, 2008. "Why has China Grown so Fast? The Role of Structural Change," Economics Series Working Papers 415, University of Oxford, Department of Economics.
    5. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2012. "The Effect of Economic Reform and Industrial Policy in a Panel of Chinese Cities," DEGIT Conference Papers c017_061, DEGIT, Dynamics, Economic Growth, and International Trade.
    6. Justin Yifu Lin & Fang Cai & Zhou Li, 1994. "China's economic reforms : pointers for other economies in transition?," Policy Research Working Paper Series 1310, The World Bank.
    7. Wang, Yijiang & Chang, Chun, 1998. "Economic transition under a semifederalist government: The experience of China," China Economic Review, Elsevier, vol. 9(1), pages 1-23.
    8. Macours, Karen & Swinnen, Johan F. M., 2000. "Causes of Output Decline in Economic Transition: The Case of Central and Eastern European Agriculture," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 172-206, March.
    9. Xu, Cheng-Gang, 2010. "The Institutional Foundations of China?s Reforms and Development," CEPR Discussion Papers 7654, C.E.P.R. Discussion Papers.
    10. Johan F.M. Swinnen & Anneleen Vandeplas & Miet Maertens, 2009. "Liberalization with Endogenous Institutions: A Comparative Analysis of Agricultural Reform in Africa, Asia, and Europe," LICOS Discussion Papers 23309, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    11. Du, Yuxin & Teixeira, Aurora A.C., 2012. "A bibliometric account of Chinese economics research through the lens of the China Economic Review," China Economic Review, Elsevier, vol. 23(4), pages 743-762.
    12. Carter, Colin A. & Zhang, Bin, 1998. "The Weather Factor and Variability in China's Grain Supply," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 529-543, September.
    13. Thomas Vendryes, 2014. "Peasants Against Private Property Rights: A Review Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 971-995, December.
    14. Carter, Colin A. & Estrin, Andrew J., 2001. "Market Reforms Versus Structural Reforms in Rural China," Journal of Comparative Economics, Elsevier, vol. 29(3), pages 527-541, September.
    15. Samuel Marden, 2016. "Family Size and the Demand for Sex Selection: Evidence From China," Working Paper Series 9016, Department of Economics, University of Sussex.
    16. Ravallion, Martin, 2009. "Are There Lessons for Africa from China's Success Against Poverty?," World Development, Elsevier, vol. 37(2), pages 303-313, February.
    17. Du, Jane & Deng, Kent, 2016. "To get the prices right for food: a “Gerschenkron state” versus the market in reforming China, 1979–2006," Economic History Working Papers 65369, London School of Economics and Political Science, Department of Economic History.
    18. Lu Ming & Zhao Chen & Yongqin Wang & Yan Zhang & Yuan Zhang & Changyuan Luo, 2013. "China’s Economic Development," Books, Edward Elgar Publishing, number 14502.
    19. Justin Yifu Lin & Yan Wang, 2020. "Seventy Years of Economic Development: A Review from the Angle of New Structural Economics," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 28(4), pages 26-50, July.
    20. Justin Yifu Lin, 2007. "Development and Transition : Idea, Strategy, and Viability," Development Economics Working Papers 22709, East Asian Bureau of Economic Research.

    More about this item

    Keywords

    patterns of trade; learning; innovation and growth;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    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:wbk:wbrwps:4799. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.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.