Introducing Schumpeter to China

2021 ◽  
pp. 1-28
Author(s):  
Keun Lee
Keyword(s):  
Technological Development ◽  
Path Following ◽  
Main Hypothesis ◽  
Middle Income ◽  
Path Creation ◽  
Market Shares ◽  
Closing The Gap ◽  
Thucydides Trap ◽  
Catch Up ◽  
Technological Leapfrogging

Economic catch-up is defined in the literature as the narrowing of a latecomer firm’s or country’s gap vis-à-vis a leading country or firm. However, latecomers do not simply follow the advanced countries’ path of technological development; rather, they sometimes do something new, skip certain stages, or create a new path that is different from those of the forerunners. Although the path-following strategy based on the initial factor–cost advantages helps in the gradual catch-up of late entrants’ market shares, a sharp increase in the latecomers’ market shares is likely to occur when a shift in technologies or demand conditions occurs. Such a shift is utilized by the path creation or stage skipping of latecomers, both of which can be considered a case of leapfrogging. That is, leapfrogging is a latecomer doing something differently from forerunners, often ahead of them. Technological leapfrogging is a precondition for success in technological catch-up or in closing the gap with incumbents in terms of technological capabilities. Then, such technological catch-up in several sectors may lead to economic catch-up in terms of the growth of per capita GDP or economic power. This eventual linkage from technological leapfrogging to economic catch-up via technological catch-up is what we mean by the title of this book. We focus on this main hypothesis with the Chinese experience in this book. One conclusion from this book is that China’s successful rise as a global industrial power has been due to its strategy of technological leapfrogging, which has enabled it to move beyond the middle-income trap and possibly the Thucydides trap, although at a slower speed.

China's Technological Leapfrogging and Economic Catch-up

2021 ◽  
Author(s):  
Keun Lee
Keyword(s):  
Middle Income ◽  
Technological Gap ◽  
Beijing Consensus ◽  
Thucydides Trap ◽  
Catch Up ◽  
Middle Income Trap ◽  
Growing Economy ◽  
Technological Leapfrogging ◽  
Rising Power ◽  
Key Terms

After a miraculous economic growth, spurred by the Beijing Consensus, China is now facing a slowdown. This book deals with the interesting issue of the middle-income trap—the phenomenon of the rapidly growing economy of a country stagnating at the middle-income level—in the context of China. It also discusses China’s limitations and future prospects, especially after the onset of a new “cold war” between China and the US, and in particular whether it would fall into the “Thucydides trap,” the conflict between a rising power and the existing hegemon. This book plays around three key terms, the Beijing Consensus, the middle-income trap, and the Thucydides trap, and applies a Schumpeterian approach to these concepts. It also conducts a comparative analysis examining China from an “economic catch-up” perspective. Economic catch-up starts with learning from and imitating a forerunner, but a successful catch-up requires leapfrogging, which implies a latecomer doing something different from, and often ahead of, a forerunner. Technological leapfrogging may lead to technological catch-up, which means reducing the technological gap, and then to economic catch-up in living standards and economic size. This linkage between technological and economic catch-up corresponds exactly with a similar linkage between the Beijing Consensus and escaping (or not) the middle-income and Thucydides traps. The book concludes that China’s successful rise as a global industrial power has been due to its strategy of technological leapfrogging, which has enabled it to move beyond the middle-income trap and possibly the Thucydides trap, although at a slower speed.

scholarly journals Creating your own path to move beyond the middle-income trap: lessons from Korea

Nova Economia ◽  
2020 ◽  
Vol 30 (spe) ◽  
pp. 1145-1167
Author(s):  
Paulo Henrique Assis Feitosa
Keyword(s):  
Developing Countries ◽  
Policy Implication ◽  
New Technologies ◽  
Technological Development ◽  
Policy Implications ◽  
Middle Income ◽  
Income Status ◽  
Development Experience ◽  
Catch Up ◽  
Middle Income Trap

Abstract The development experience observed in Korea has been a symbol of successful catch-up for several decades. This process allowed its upward transition from middle income to high-income status and has drawn the attention of many streams of scholars. More recently, emergent research has improved our understanding of this experience and its policy implications for developing countries (Lee, 2013; 2016; 2019). This paper proposes a review of what this literature has to say about the mechanisms behind the successful path followed by Korea and a discussion of lessons to overcome the middle-income trap. It is argued that latecomers do not limit themselves to follow the path of technological development of the advanced countries and that alternative paths are possible. The main policy implication for latecomers is that a successful catch-up is possible yet difficult to achieve because it requires taking detours and leapfroging into new technologies.

scholarly journals Net-zero emission vehicles shift and equitable ownership in low-income households and communities: why responsible and circularity business models are essential

2021 ◽  
Vol 2 (1) ◽  
Author(s):  
Nana O. Bonsu
Keyword(s):  
Air Pollution ◽  
Low Income ◽  
Value Chain ◽  
Business Models ◽  
Industrial Revolution ◽  
Technological Development ◽  
Middle Income ◽  
Net Zero ◽  
Zero Emission ◽  
The Uk

AbstractThe UK Plan for a Green Industrial Revolution aims to ban petrol and diesel cars by 2030 and transition to electric vehicles (EVs). Current business models for EV ownership and the transition to net-net zero emissions are not working for households in the lowest income brackets. However, low-income communities bear the brunt of environmental and health illnesses from transport air pollution caused by those living in relatively more affluent areas. Importantly, achieving equitable EV ownership amongst low-and middle-income households and driving policy goals towards environmental injustice of air pollution and net-zero emissions would require responsible and circular business models. Such consumer-focused business models address an EV subscription via low-income household tax rebates, an EV battery value-chain circularity, locally-driven new battery technological development, including EV manufacturing tax rebates and socially innovative mechanisms. This brief communication emphasises that consumer-led business models following net-zero emission vehicles shift and decisions must ensure positive-sum outcomes. And must focus not only on profits and competitiveness but also on people, planet, prosperity and partnership co-benefits.

scholarly journals Catching up, falling behind: the need to build upgrading coalitions for innovation and inclusive development in South Africa

Nova Economia ◽  
2020 ◽  
Vol 30 (spe) ◽  
pp. 1115-1144
Author(s):  
Glenda Kruss
Keyword(s):  
South African ◽  
Informal Economy ◽  
Local Economic Development ◽  
Inclusive Development ◽  
Middle Income ◽  
Catching Up ◽  
Open Debate ◽  
Catch Up ◽  
Middle Income Trap ◽  
Income Concentration

Abstract Through analysis of the South African case, a country stalled in a middle income trap, the paper aims to add to the literature on catch-up. It uses Albuquerque’s (2019) model of the vicious cycles arising from inequality and income concentration, together with the notion of ‘upgrading coalitions’ (Doner and Schneider 2016) required to challenge these vicious cycles, to analyse the persistence of lock-ins. It then analyses a global astronomy project, a ‘window of opportunity’ building on historically grown capabilities, promoted by ‘upgrading coalitions’ operating in the national interest. In contrast, it proposes a ‘detour’ to build domestic capabilities, driven by an upgrading coalition centred on local economic development and livelihoods in the informal economy. The paper aims to reinforce the evidence on how inequality is both a cause and consequence of a middle income trap, and open debate on how upgrading coalitions may be a critical strategy for breaking lock-ins.

Structural Change as a Modernization Process

2021 ◽  
pp. 217-239
Author(s):  
Alejandro Lavopa ◽  
Adam Szirmai
Keyword(s):  
Economic Development ◽  
Structural Change ◽  
Labour Force ◽  
Two Dimensions ◽  
Middle Income ◽  
Employment Share ◽  
Catch Up ◽  
Modernization Process ◽  
Relative Productivity ◽  
The Relationship

This chapter analyses economic development through the lens of a newly developed index: the structural modernization index. This index combines two dimensions that have been widely invoked as prime drivers of economic development namely, structural change and technological catch-up. For each country, the index calculates the productivity gap with respect to the world frontier in activities that typically represent the modern sector of the economy and weights this relative productivity by the employment share of those activities in the total labour force. The index is calculated for a sample of 115 countries over the period 1960–2014. It is used to explore the relationship between structural modernization and the ability to escape poverty and middle-income traps.

Learning from Technologically Successful Peers: The Convergence of Asian Laggards to the Technology Frontier

2020 ◽  
Author(s):  
Yuzhe Miao ◽  
Robert M. Salomon ◽  
Jaeyong Song
Keyword(s):  
Developing Countries ◽  
Reference Group ◽  
Technological Development ◽  
Developed Countries ◽  
Technological Gap ◽  
Technological Improvement ◽  
Closing The Gap ◽  
Marginal Returns

This paper investigates whether firms from developing countries that lag the global technological frontier can learn from technologically successful peers as a means of closing the technological gap with leaders from developed countries. We define technologically successful peers as those that hail from similar home countries, operate in the same industry, and have achieved a certain degree of success in closing the gap with the global technological frontier. We argue that technologically successful peers represent an important reference group for lagging firms and, as such, offer opportunities for lagging firms from developing countries to hasten technological development. We find that lagging firms from developing countries that build upon the knowledge of technologically successful peers achieve higher rates of technological improvement. Moreover, learning from technologically proximal successful peers helps even further with technological improvement. However, there are limits to such learning, with diminishing marginal returns to lagging firms that over rely on successful peers.

scholarly journals Technological Learning, Industrial Policy, and Catch-up

2019 ◽  
pp. 1-12
Author(s):  
Arkebe Oqubay ◽  
Kenichi Ohno
Keyword(s):  
Industrial Policy ◽  
First Century ◽  
Dynamic Learning ◽  
Middle Income ◽  
Technological Learning ◽  
Middle Income Countries ◽  
Early Stages ◽  
Country Level ◽  
The Future ◽  
Catch Up

Why is catch-up rare? And why have some nations succeeded while others failed? What are the prospects for successful learning and catch-up in the twenty-first century? This chapter introduces the aims, themes, and analytical perspectives of How Nations Learn, outlining the focus of each chapter, and considering pathways to the future. The volume examines how nations learn by reviewing key structural and contingent factors that contribute to dynamic learning and catch-up. It uses historical as well as firm-, industry-, and country-level evidence and experiences to identify sources and drivers of successful learning and catch-up and the lessons for late-latecomer countries. It aims to generate interest and debate among policymakers, practitioners, and researchers on the complexity of learning and catch-up, not only for late late developers but also for middle-income countries in the early stages of industrialization.

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