Lessons from China and East Asia’s catch up: the new structural economics perspective

Abstract

In post-World War II, East Asia was considered the least hopeful regions for development in the world due to its poor natural endowments and high population density. Against the odds, East Asia has become the most dynamically growing region in the world, substantially closing the gap between the Western industrialized high-income countries. In the chapter, the author shows that economic development is a process of continuous technological innovation and industrial upgrading. The success of the East Asian economies was due to the fact that they have proactive governments enabling their economies to develop according to comparative advantages in a market system and tap into the potential of advantages of backwardness in the process of technological innovation and industrial upgrading. As such, these economies are competitive in domestic and international markets and grow faster than the industrialized high-income countries, enabling them to close the income gap or even catch up with the Western advanced countries.