Publication: Leading Dragons Phenomenon : New Opportunities for Catch-Up in Low-Income Countries
Date
2012-03-01
ISSN
Published
2012-03-01
Author(s)
Abstract
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.
Citation
“Chandra, Vandana; Lin, Justin Yifu; Wang, Yan. 2012. Leading Dragons Phenomenon : New Opportunities for Catch-Up in Low-Income Countries. Policy Research working paper ; no. WPS 6000. © http://openknowledge.worldbank.org/handle/10986/3288 License: CC BY 3.0 IGO.”
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