Leading Dragons Phenomenon : New Opportunities for Catch-Up in Low-Income Countries

Leading Dragons 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 and occurs through a process of continuous industrial and technological upgrading. Since the 18th century, all countries that...

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Bibliographic Details
Main Authors:	Chandra, Vandana, Lin, Justin Yifu, Wang, Yan
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ABSOLUTE POVERTY AGRICULTURAL SECTOR AGRICULTURE AUTOMOBILE AUTOMOBILES BANKING SYSTEM BINDING CONSTRAINTS BUSINESSES CAPABILITIES CAPITAL ACCUMULATION CAPITAL INTENSITY CENTRAL BANK COMMERCE COMMODITIES COMMODITY COMMODITY EXPORTS COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES COMPETITIVENESS COMPUTERS CONSUMER GOODS COST STRUCTURES CREDIT RATIONING CURRENCY DATA LIMITATIONS DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT AGENCIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT STRATEGIES DISTRIBUTION SYSTEM DIVERSIFICATION DIVIDENDS DOMESTIC CURRENCY DOMESTIC MARKET DOMESTIC MARKETS DOMESTIC SAVINGS DYNAMIC EMERGING MARKET ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC PROJECTIONS ECONOMIC STRUCTURE ECONOMIC TRENDS ELECTRICITY ELECTRONICS INDUSTRY EMERGING ECONOMIES EMERGING MARKET COUNTRIES EMERGING MARKET ECONOMIES EMERGING MARKETS EMPIRICAL EVIDENCE ENTREPRENEURIAL SKILLS EQUIPMENT EXPORT GROWTH EXPORT MARKETS EXPORT OPPORTUNITIES EXPORT PROMOTION EXPORT SHARE EXPORT SUBSIDIES EXPORTER EXPORTERS EXPORTS EXTERNALITIES EXTREME POVERTY FACTOR ENDOWMENTS FINANCIAL CAPITAL FINANCIAL CRISIS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN VALUE GDP GDP PER CAPITA GLOBAL ECONOMY GLOBAL EXPORTS GLOBAL MARKET GLOBAL MARKETS GLOBAL SUPPLY CHAINS GLOBALIZATION GNP GOLD STANDARD GOVERNMENT CONTRACTS GOVERNMENT SUPPORT GROWTH MODELS GROWTH PATH GROWTH RATE GROWTH RATES GROWTH STRATEGY INCOME INCOME GROWTH INCOME LEVEL INCOME LEVELS INDIVIDUAL FIRMS INDUSTRIAL BASE INDUSTRIAL COUNTRIES INDUSTRIAL COUNTRY INDUSTRIAL DEVELOPMENT INDUSTRIAL ECONOMY INDUSTRIAL PRODUCTION INDUSTRIAL REVOLUTION INDUSTRIAL SECTOR INDUSTRIAL STRUCTURE INDUSTRIALIZATION INFORMATION COMMUNICATION INFORMATION TECHNOLOGY INNOVATIONS INSTRUMENT INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL STANDARDS INVESTMENT CAPITAL INVESTMENT POLICY JOINT STOCK COMPANIES JOINT VENTURES LABOR FORCE LIBERALIZATION LIBERALIZATION OF TRADE LICENSE LICENSES LOW-INCOME COUNTRIES LOW-INCOME COUNTRY MANAGERIAL SKILLS MANUFACTURING MANUFACTURING INDUSTRIES MANUFACTURING INDUSTRY MARKET COMPETITION MARKET FAILURES MARKET MECHANISM MARKET SHARE MARKET SHARES MATERIAL MEDIUM TERM MONOPOLY MOV MULTINATIONAL CORPORATIONS NATIONAL ACCOUNTS NATIONAL INVESTMENT NATURAL RESOURCE NATURAL RESOURCES NEW MARKET NEW PRODUCT NEW TECHNOLOGIES NEW TECHNOLOGY OPEN ACCESS OPEN ECONOMIES OUTPUT PER CAPITA GROWTH PER CAPITA INCOME PER CAPITA INCOME LEVELS PER CAPITA INCOMES POLICY INTERVENTIONS POLICY RESEARCH POLICY STANCE POLITICAL STABILITY POOR COUNTRIES POOR PEOPLE POVERTY LINE POVERTY RATE POVERTY RATES POVERTY REDUCTION PRIMARY PRODUCTS PRIVATE CAPITAL PRIVATE SECTORS PRIVATIZATION PRODUCT DIFFERENTIATION PRODUCTIVITY PRODUCTIVITY GROWTH PROTECTIONISM PUBLIC WORKS R&D RADIOS RAPID DEVELOPMENT RAPID ECONOMIC GROWTH RAPID GROWTH RAPID INDUSTRIALIZATION REAL GDP RESERVE RESULT RESULTS RETAIL TRADE RETURNS RICH COUNTRIES RURAL AREAS SAVINGS SEMICONDUCTOR SETTLEMENT SKILLED LABOR SKILLED WORKERS STATE-OWNED ENTERPRISES STRUCTURAL CHANGE TAX TAX COLLECTION TECHNOLOGICAL INNOVATION TECHNOLOGICAL PROGRESS TECHNOLOGY FRONTIER TECHNOLOGY TRANSFER TELEGRAPH TRADE BARRIERS TRADE DEFICIT TRADE REGIME TRADING TRANSACTION TRANSACTION COSTS TRANSISTOR TREATIES TREATY URBAN AREAS VALUE ADDED VALUE CHAIN WAGES WEB WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD MARKET WORLD MARKETS WORLD TRADE WTO
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120315164328 http://hdl.handle.net/10986/3288

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Summary:	Modern economic development is accompanied by the structural transformation from an agrarian to an industrial economy and occurs through a process of continuous industrial and technological upgrading. Since the 18th century, all countries that industrialized successfully in Europe, North America and East Asia followed their comparative advantage and leveraged the late-comer advantage to emulate the leader-follower flying geese pattern of industrial upgrading. The large dynamic emerging market countries such as China, India and Brazil are also engaged in industrial upgrading but with a critical difference. In particular, because of its sheer size, China has absorbed nearly all labor-intensive jobs and become the world s largest exporter of labor-intensive products. The current view is that China s dominance hinders poor countries from developing similar industries. The authors argue that industrial upgrading has increased wages and is causing China to graduate from labor-intensive to more capital- and technology-intensive industries. These industries will shed labor and create a huge opportunity for lower wage countries to start a phase of labor-intensive industrialization. This process, called the Leading Dragon Phenomenon, offers an unprecedented opportunity to low-income Sub-Saharan Africa where the industrial sector is underdeveloped and investment capital and entrepreneurial skills are leading constraints to manufacturing. It can seize the opportunity and resolve the constraints by attracting some of the OFDI flowing currently from China, India and Brazil into the manufacturing sectors of other developing countries. All low-income countries will compete but to catch the jobs spillover from China, the winner must implement credible economic development strategies that are consistent with its comparative advantage.

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