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

Jesus Felipe (jesus.felipe@dlsu.edu.ph), Utsav Kumar, Norio Usui (nusui@iuj.ac.jp) and Arnelyn Abdon

Economics Working Paper Archive from Levy Economics Institute

Abstract: 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.

Keywords: China; Capabilities; Diversification; Export-led Growth; Leapfrogging; Open Forest; Product Space; Sophistication (search for similar items in EconPapers)
JEL-codes: O20 O25 O53 (search for similar items in EconPapers)
Date: 2010-08
New Economics Papers: this item is included in nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Journal Article: Why has China succeeded? And why it will continue to do so (2013)
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