Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries
Modern economic development is accompanied by the structural transformation from an agrarian to an industrial economy. Since the 18th century, all countries that industrialized successfully have followed their comparative advantages and leveraged the latecomer advantage, including emerging market ec...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
World Scientific Publishing
2013-03-01
|
| Series: | Asian Development Review |
| Subjects: | |
| Online Access: | https://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00003 |
| _version_ | 1828953994460921856 |
|---|---|
| author | Vandana Chandra Justin Yifu Lin Yan Wang |
| author_facet | Vandana Chandra Justin Yifu Lin Yan Wang |
| author_sort | Vandana Chandra |
| collection | DOAJ |
| description | Modern economic development is accompanied by the structural transformation from an agrarian to an industrial economy. Since the 18th century, all countries that industrialized successfully have followed their comparative advantages and leveraged the latecomer advantage, including emerging market economies such as the People's Republic of China (PRC), India, and Indonesia. The current view is that Chinese dominance in manufacturing hinders poor countries from developing similar industries. We argue that rising labor cost is causing the PRC to graduate from labor-intensive to more capital-intensive and technology-intensive industries. This will result in the relocation of low-skill manufacturing jobs to other low-wage countries. This process, which we call the “leading dragon phenomenon,” offers an unprecedented opportunity to low-income countries. Such economies can seize this opportunity by attracting the rising outward foreign direct investment flowing from Brazil, the PRC, India, and Indonesia into the manufacturing sectors. All low-income countries can compete for the jobs spillover from the PRC and other emerging economies, but the winner must implement credible economic development strategies that are consistent with its comparative advantage. |
| first_indexed | 2024-12-14T07:22:35Z |
| format | Article |
| id | doaj.art-df6bef0e4d7f4740a382c294c2877f77 |
| institution | Directory Open Access Journal |
| issn | 0116-1105 1996-7241 |
| language | English |
| last_indexed | 2024-12-14T07:22:35Z |
| publishDate | 2013-03-01 |
| publisher | World Scientific Publishing |
| record_format | Article |
| series | Asian Development Review |
| spelling | doaj.art-df6bef0e4d7f4740a382c294c2877f772022-12-21T23:11:35ZengWorld Scientific PublishingAsian Development Review0116-11051996-72412013-03-01301528410.1162/ADEV_a_00003ADEV_a_00003Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income CountriesVandana Chandra0Justin Yifu Lin1Yan Wang2Vandana Chandra (Vchandra@worldbank.org) is Senior Economist at the World BankJustin Yifu Lin (Justinlin@ccer.pku.cn) is founding Director and Professor of the China Centre for Economic Research at Peking UniversityYan Wang (Ywang2005b@gmail.com) is Visiting Professor at George Washington University.Modern economic development is accompanied by the structural transformation from an agrarian to an industrial economy. Since the 18th century, all countries that industrialized successfully have followed their comparative advantages and leveraged the latecomer advantage, including emerging market economies such as the People's Republic of China (PRC), India, and Indonesia. The current view is that Chinese dominance in manufacturing hinders poor countries from developing similar industries. We argue that rising labor cost is causing the PRC to graduate from labor-intensive to more capital-intensive and technology-intensive industries. This will result in the relocation of low-skill manufacturing jobs to other low-wage countries. This process, which we call the “leading dragon phenomenon,” offers an unprecedented opportunity to low-income countries. Such economies can seize this opportunity by attracting the rising outward foreign direct investment flowing from Brazil, the PRC, India, and Indonesia into the manufacturing sectors. All low-income countries can compete for the jobs spillover from the PRC and other emerging economies, but the winner must implement credible economic development strategies that are consistent with its comparative advantage.https://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00003structural transformationAsiaAfricaPeople's Republic of Chinaflying geese |
| spellingShingle | Vandana Chandra Justin Yifu Lin Yan Wang Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries Asian Development Review structural transformation Asia Africa People's Republic of China flying geese |
| title | Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries |
| title_full | Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries |
| title_fullStr | Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries |
| title_full_unstemmed | Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries |
| title_short | Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries |
| title_sort | leading dragon phenomenon new opportunities for catch up in low income countries |
| topic | structural transformation Asia Africa People's Republic of China flying geese |
| url | https://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00003 |
| work_keys_str_mv | AT vandanachandra leadingdragonphenomenonnewopportunitiesforcatchupinlowincomecountries AT justinyifulin leadingdragonphenomenonnewopportunitiesforcatchupinlowincomecountries AT yanwang leadingdragonphenomenonnewopportunitiesforcatchupinlowincomecountries |