Chandra, V.Osorio-Rodarte , I.Primo Braga, C. A.2012-03-192012-03-192009-10-01https://hdl.handle.net/10986/4292This paper tests a neo-Schumpeterian model with industry-level data to analyze how Brazil, India, and China are catching up with South Korea s technological frontier in a globalized world. The paper validates Aghion et al. s inverted-U hypothesis that industries that are closer to the technological frontier innovate to escape competition while longer distances discourage innovating. It suggests that for effective catching up, distance-shortening (or innovation-enhancing) policies may be a necessary complement to liberalization. South Korea and China combined a variety of distance-shortening policies with financial subsidies to promote high tech industries and an export-led growth strategy. Post-liberalization, they leveraged swift competition to spur catch-up. In comparison, Brazil, which was as rich as South Korea, and India, which was as rich as China in 1980, are catching up more slowly. Import-substitution industrialization strategies saddled Brazil and India with a large anti-export bias, and unfocused attention to innovation-enhancing policies dampened global competitiveness. Post liberalization, many of their industries were too far behind the technological frontier to effectively benefit from competition. The catch-up experiences of Brazil, India, and China with South Korea illustrate that distance from the technological frontier matters and that the design of country-specific distance- shortening policies can be an important complement to trade liberalization in promoting catching up with richer countries.CC BY 3.0 IGOANTITRUSTAUTOMOBILESBANKINGBENCHMARKBENCHMARKINGBUSINESSCAPABILITIESCAPABILITYCHEMICALCLOSED ECONOMYCOLLABORATIONCOMPARATIVE ADVANTAGECOMPETITIONCOMPETITION POLICYCOMPETITIVE EDGECOMPETITIVENESSCONSULTANTCONTENTCOVARIANCE MATRIXCREDITDATADATA LIMITATIONSDATABASEDEBTDEVELOPMENTDEVELOPMENT POLICYDISCUSSIONDRIVERSECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC INTEGRATIONECONOMIC PERFORMANCEECONOMIC RENTSECONOMIC THEORYECONOMYEFFECTSEFFICIENCYELECTRICAL SOURCEELECTRONICS INDUSTRYEMPLOYMENTEQUIPMENTEXOGENOUS VARIABLESEXPORTSFINANCEFINANCIAL CRISISFOREIGN COMPETITIONFOREIGN TRADEGDPGDP PER CAPITAGLOBAL COMPETITIVENESSGLOBAL MARKETGLOBAL MARKETSGOODSGOVERNMENT POLICIESGOVERNMENT REGULATIONSGROWTH RATEGROWTH STRATEGYGROWTH THEORYHUMAN CAPITALHUMAN RESOURCEHUMAN RESOURCE DEVELOPMENTHUMAN RESOURCESIDEASINCENTIVESINCOMEINCOME LEVELSINDUSTRIAL DEVELOPMENTINDUSTRIAL RESEARCHINDUSTRIAL STRUCTUREINDUSTRIALIZATIONINDUSTRYINDUSTRY SCOREBOARDINFORMATIONINNOVATIONINNOVATION POLICIESINNOVATION POLICYINNOVATION STRATEGIESINNOVATION STRATEGYINNOVATIONSINPUTSINSTITUTIONSINTELLECTUAL PROPERTYINTELLECTUAL PROPERTY PROTECTIONINTELLECTUAL PROPERTY RIGHTSINTERNATIONAL STANDARDSINTUITIONINVESTMENTIRONLABORLABOR FORCELABOR PRODUCTIVITYLAGSLAWLEADINGLEARNINGLICENSEMACROECONOMIC STABILITYMANAGEMENTMANUFACTURINGMANUFACTURING INDUSTRIESMARKET COMPETITIONMARKET ECONOMIESMARKET PLACEMARKET SHAREMARKETSMEMORYMEMORY CHIPSMIDDLE INCOME COUNTRIESMONITORINGMONOPOLYMONOPOLY RENTSNATURAL RESOURCENETWORKOPEN ACCESSORGANIZATIONSOUTCOMESPATENTSPAYMENTSPER CAPITA INCOMEPER CAPITA INCOMESPETROLEUM REFINERIESPOLICIESPRICEPRICESPRIVATE INVESTMENTSPRIVATE SECTORPROCESSPROCUREMENTPRODUCTIONPRODUCTIVITYPRODUCTIVITY GROWTHPRODUCTSPROFITSPROPERTY RIGHTSR&DRENTSRESEARCHRESULTRESULTSRISKSEEDINGSEMICONDUCTORSSOFTWARESTANDARDSTARGETTARIFF BARRIERSTAX INCENTIVESTAX SUBSIDIESTAX SUBSIDYTAXESTECHNICAL SKILLSTECHNOLOGICAL INNOVATIONTECHNOLOGIESTECHNOLOGYTECHNOLOGY DEVELOPMENTTECHNOLOGY TRANSFERTOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTRADETRADE BARRIERSTRADE LIBERALIZATIONTRADE POLICIESTRADE REFORMSTRAININGTRANSITION ECONOMIESTRENDSUNDERSTANDINGUSESVALUEVALUE ADDEDVARIABLESVARIETYWEBWORLD ECONOMYWORLD TRADEWorld Bank10.1596/1813-9450-5101