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

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Specialization in Entry-Level Products: A Strategy for Industrial Development in Africa

“…While China's share has increased in the first three segments since the early 2000s, the pace has been fastest in the entry-level segment. However, as Chaponnière and Lautier (2014) indicate, China is facing an increase in wages-wages increased by 2.4% on average in the 2000s-and this rise in wages could be a source of new industrial opportunities for other developing countries (Chandra et al, 2012), including Africa. In addition, China is in the process of upgrading the quality of its products.…”

The new structural economics: patient capital as a comparative advantage

“…(Halland et al, 2014, p. 14). Based on the intellectual foundation of New Structural Economics (Lin, 2012), we had discussed the pros and cons of this RFI approach by stressing the structural aspects of the RFI concept, especially focusing on its feature of "nonrecourse" or "limited recourse" loans which are favorable to the borrower; its ability of reducing transaction cost, reducing the currency mismatch and the maturity mismatch, and encouraging the spatial concentration/agglomeration; as well as the risks associated with political economy and transparency issues. We pointed explicitly that, "There are legitimate concerns over the transparency issues around past RFI packages.…”

China's Slowdown and Rebalancing: Potential Growth and Poverty Impacts on Sub-Saharan Africa

“…As China's working-age population is expected to stop growing coupled with rising wages, China's attractiveness as a manufacturing hub is likely to decline (African Development Bank, 2014). As suggested by Chandra et al (2012), China might soon have 85 million light manufacturing jobs to export and with the right policies in place, Africa might benefit from these opportunities.…”

“…Third, motivated by increasing labor costs some Chinese firms might relocate production to the relatively more labor abundant Africa. Although FDI and multinational companies are not explicitly considered in our modeling framework, such effects will be indirectly represented as a result of changing comparative advantages and the specialization of SSA economies in goods that are relatively labor abundant (Chandra et al, 2012;Dollar, 2013). Fourth, as economic growth in China slows down, the pool of savings is likely to decline, leading to less funding for Chinese investment in Africa, in particular in natural resource sectors and infrastructure.…”