Working Paper: CEPR ID: DP5484
Authors: Dani Rodrik
Abstract: Much more than comparative advantage and free markets have been at play in shaping China's export success. Government policies have helped nurture domestic capabilities in consumer electronics and other advanced areas that would most likely not have developed in their absence. As a result, China has ended up with an export basket that is significantly more sophisticated than what would be normally expected for a country at its income level. This has been an important determinant of China's rapid growth. What matters for China's future growth is not the volume of exports, but whether China will continue to latch on to higher-income products over time.
Keywords: development; economic growth
JEL Codes: F1; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher productivity exports (O49) | Economic growth (O49) |
| Government policies (H59) | Domestic capabilities (H56) |
| Domestic capabilities (H56) | Export sophistication (Y60) |
| Export sophistication (Y60) | Economic growth (O00) |
| Government policies (H59) | Export sophistication (Y60) |
| Initial level of export sophistication (expy) (F14) | Subsequent growth (O41) |