Catch-up Cycle: A General Equilibrium Framework

Liu Peilin, Jia Shen and Xun Zhang ()
Additional contact information
Liu Peilin: Asian Development Bank Institute
Jia Shen: Asian Development Bank Institute

No 660, ADBI Working Papers from Asian Development Bank Institute

Abstract: Certain stylized facts are common among successful economic latecomers: an inverse U-shaped gross domestic product and capital per capita growth rate, high growth rates during the catch-up period, and rapid structural changes. We propose, for the first time, a general equilibrium framework to document the catch-up cycle that a successful latecomer is likely to experience. We argue that technology adoption and imitation, and diminishing marginal returns to capital are the two driving forces of the catch-up cycle. The technological gap and speed/efficiency of technological catching-up are two fundamental factors for successful catching-up. This paper concludes with a case study for the People’s Republic of China and sheds light on the different policy choices at various stages of the catch-up cycle.

Keywords: Catch-up cycle; Latecomers; General Equilibrium; Total Factor Productivity (TFP); China (search for similar items in EconPapers)
JEL-codes: E13 E60 O11 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2017-02-03
New Economics Papers: this item is included in nep-dge, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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