Wang, YanLin, Justin Yifu2012-05-242012-05-242008-12https://hdl.handle.net/10986/6336The process of development is full of uncertainties, especially if it is a process of transition from a planned economy to a market oriented one. Because of uncertainties and country specificity, development must be a process of learning, selective adaptation, and industrial upgrading. This paper attempts to distill lessons from China's reform and opening up process, and investigate the underlying reasons behind China's success in trade expansion and economic growth. From its beginnings with home-grown and second-best institutions, China has embarked on a long journey of reform, experimentation, and learning by doing. It is moving from a comparative advantage-defying strategy to a comparative advantage-following strategy. The country is catching up quickly through augmenting its factor endowments and upgrading industries; but this has been only partially successful. Although China is facing several difficult challenges - including rising inequality, an industrial structure that is overly capital and energy intensive, and related environmental degradation - it is better positioned to tackle them now than it was 30 years ago. This paper reviews the drivers behind China's learning and trade integration and provides both positive and negative lessons for developing countries with diverse natural endowments, especially those in Sub-Saharan Africa.CC BY 3.0 IGOACCOUNTING STANDARDSADMINISTRATIVE CONTROLSAGRICULTUREALLOCATIONBACKED SECURITIESBALANCE SHEETBANK DEPOSITSBANK LENDINGBARRIERS TO ENTRYBENCHMARKBUDGET CONSTRAINTSCAPACITY BUILDINGCAPITAL ACCOUNTCAPITAL ACCUMULATIONCAPITAL INFLOWSCAPITAL INTENSITYCAPITAL STOCKCENTRAL BANKCENTRALLY PLANNED ECONOMIESCENTRALLY PLANNED ECONOMYCLOSED ECONOMYCOMMERCIAL BANKCOMMERCIAL BANKSCOMMODITIESCOMMODITYCOMMODITY PRICECOMPARATIVE ADVANTAGECOMPARATIVE ADVANTAGESCOMPETITIVE MARKETSCOMPETITIVENESSCONTROLLED PRICESCOST OF CAPITALCOST STRUCTURECREDIT RATIONINGCURRENT ACCOUNT SURPLUSDEBTDECENTRALIZATIONDEMAND FOR CREDITDEPOSITDEPOSIT RATEDEVALUATIONDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPING ECONOMIESDEVELOPMENT ECONOMICSDEVELOPMENT STRATEGYDISPOSABLE INCOMEDIVIDENDSDOMESTIC MARKETDOMESTIC PRICESECONOMIC DEVELOPMENTECONOMIC GEOGRAPHYECONOMIC GROWTHECONOMIC IMPLICATIONSECONOMIC LIBERALIZATIONECONOMIC PERFORMANCEECONOMIC REFORMECONOMIC REFORMSECONOMIC RESEARCHECONOMIC STRUCTUREECONOMIC SYSTEMECONOMIC THEORYEQUIPMENTEQUITY MARKETEXCHANGE RATEEXCHANGE RATE SYSTEMEXCHANGE RATESEXPORT GROWTHEXPORT MARKETEXPORT PROCESSING ZONESEXPORT SECTORSEXPORTEREXPORTERSEXPORTSEXTERNALITIESFINANCIAL CRISISFINANCIAL INNOVATIONSFINANCIAL INSTRUMENTSFINANCIAL REFORMSFINANCIAL SECTORSFINANCIAL STRUCTUREFINANCIAL SYSTEMFISCAL DECENTRALIZATIONFISCAL POLICIESFISCAL POLICYFIXED ASSETSFIXED CAPITALFOREIGN BANKFOREIGN CAPITALFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN FIRMSFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN TRADEFOREIGN VALUEGDPGINI COEFFICIENTGLOBAL ECONOMIC PROSPECTSGLOBAL ECONOMYGNPGROSS FIXED CAPITAL FORMATIONGROWTH IN TRADEGROWTH RATEGROWTH RATESHUMAN CAPITALINCENTIVE STRUCTUREINCOMEINCOME DISTRIBUTIONINCOMESINDUSTRIAL COUNTRIESINDUSTRIALIZATIONINEFFICIENCYINFANT INDUSTRY ARGUMENTINFLATIONINSTITUTIONAL CAPACITYINSTITUTIONAL DEVELOPMENTINTEREST PAYMENTSINTEREST RATEINTEREST RATE POLICYINTERNATIONAL BANKINTERNATIONAL COMPETITIONINTERNATIONAL MARKETINTERNATIONAL MARKETSINTERNATIONAL TRADEINVESTINGINVESTMENT CLIMATEJOB CREATIONJOINT VENTURESLABOR MARKETLEGAL ENVIRONMENTLEGAL FRAMEWORKLIBERALIZATION OF TRADELOANLOAN RATESLOCAL BANKSLOCAL GOVERNMENTSLOW INTEREST RATELOW INTEREST RATESLOW-INCOME COUNTRIESLOW-INCOME COUNTRYMACROECONOMIC POLICIESMANUFACTURING INDUSTRYMARKET CONDITIONMARKET CONDITIONSMARKET DEMANDMARKET DEVELOPMENTMARKET ECONOMIESMARKET ECONOMYMARKET PRICEMARKET PRICESMARKET SIZEMONOPOLYMORTGAGENATIONAL INCOMENATIONAL SECURITYNATURAL CAPITALNATURAL ENDOWMENTSNATURAL RESOURCESNEOCLASSICAL ECONOMICSNEW PRODUCTSOPPORTUNITY COSTSOUTPUTSOUTSTANDING LOANSPLANNED ECONOMYPOLITICAL ECONOMYPOLLUTIONPRICE DECLINESPRICE DISTORTIONPRICE DISTORTIONSPRIME LENDING RATEPRIVATE ENTERPRISEPRIVATE SECTORPRIVATE SECTOR DEVELOPMENTPRIVATE SECTOR GROWTHPRIVATIZATIONPRODUCTION FUNCTIONPRODUCTION STRUCTUREPROPERTY RIGHTSPUBLIC GOODSPUBLIC POLICYRAPID DEVELOPMENTRAPID ECONOMIC GROWTHRAPID EXPANSIONRAPID GROWTHRATE OF RETURNREAL GDPREAL GROSS DOMESTIC PRODUCTREGULATORSREINVESTMENTREPUBLICRESERVESRETURNSSAVINGSSAVINGS RATESSHARE OF CREDITSPECIALIZATIONSTATE ENTERPRISESSUSTAINABLE GROWTHSWAPTAXTOTAL FACTOR PRODUCTIVITYTOTAL FACTOR PRODUCTIVITY GROWTHTOTAL OUTPUTTRADE LIBERALIZATIONTRADE POLICYTRADE PROTECTIONTRADE REFORMSTRADE REGIMESTRADINGUNEMPLOYMENTUNEMPLOYMENT RATEVALUE ADDEDWAGE RATESWAGESWORLD ECONOMYWORLD INVESTMENT REPORTWORLD TRADEWTOWorld Bank10.1596/1813-9450-4799