A Theory For Catching Up
  • Henry Y. WanJr.


For the five-sixths of mankind living in the developing world today, the late 20th century has brought reason for both distinct hope and gnawing concern. Over the last fifty years, some developing economies achieved the fastest growth rates ever seen in human history — in the course of a single generation joining the ranks of countries enjoying the highest levels of per capita income in the world. Other developing economies, however, have been left on the wrong side of a widening income gap; the world seems to have passed them by.1


Capita Income Globalized Environment Capital Formation Technology Spillover Export Promotion 
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  1. 3.
    Or to seize opportunity and deflect setbacks, as was done in Hong Kong. See Findlay and Wellisz (1993: 19-22).Google Scholar
  2. 4.
    To grasp quickly the crux of the matter, one can consult Bhagwati (1999). To see how the same facts have led to a quite different interpretation, the passionate argument of Amsden (1999) — who equally advocates trade — provides a useful example. Our own discussion of the evidence is presented throughout this volume.Google Scholar
  3. 5.
    See for example, Boeker (1993).Google Scholar
  4. 6.
    Lucas attributed the differences in growth performance to the public good nature of knowledge, a theme started with Shell (1966) and Romer (1986). In this we concur. We further believe that the fact that sustained rapid growth only occurred in economies during their mid-income phase suggests this growth represents the cross-economy spillover of knowledge capital. Such growth is a feat that has not been replicated in already technically advanced economies. Likewise, the literature on endogenous growth offers stimulation but not answers to most of the operational questions about the catching up process.Google Scholar
  5. 8.
    This is the view of Tobin (1980).Google Scholar
  6. 14.
    This approximates the notion of Kuznets (1982: 57), “at any given time, the worldwide, transnational stock of technology, sets a potential of full economic development — a level of per capita or per worker product.”Google Scholar
  7. 16.
    Germany’s catching up with England was made famous by Veblen (1915). In that instance, technical innovation by Germans themselves may be argued to have been a major part of the story. For Taiwan or Singapore, the reliance of foreign technology certainly has been a more dominant feature of their success.Google Scholar
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    See Saito (2000: 115).Google Scholar
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    For a succinct clarification of the related issues, see Bhagwati (1998).Google Scholar
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    Strictly speaking, this can hardly be represented in a one-good model. Yet, this is another occasion confirming the view of Friedman (1953), that descriptive accuracy is not needed for analytic relevance.Google Scholar
  11. 24.
    For Taiwan, cash crop exports led to a rise in working days on the farm per hectare from 170 after World War II to 260 in the early 1960s (Ranis, 2002), while shoe export production even attracted aborigine villagers from offshore islands to Taiwanese cities (Shieh, 1992: 57).Google Scholar
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    See Itoh et al. (1991) and Miyajima et al. (1999).Google Scholar
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    An example is explored in Van and Wan (1999), a micro-economic complement of Findlay (1978).Google Scholar
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    See, for example, the change in product mix of a representative firm, the Handok Company, reported by Kim and Leipziger (1993): 95% in wigs in 1971 and 51% in computer related goods in 1985.Google Scholar
  15. 30.
    The value of North Korean output probably declined with that of the Soviet Union, at its ultimate stage of existence. But the absolute decline of North Korean output seems to coincide with the virtual cessation of its Russian trade. The cause of the Finnish crisis is not certain, but the long and deep unemployment spell there (up to 20% for a time and lasting half dozen years) did coincide with the decline of the Soviet trade. See Wan (1998).Google Scholar
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    See pp.160-163 in Stern et al., 1995.Google Scholar
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    Stern et al., 1995: 161.Google Scholar
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    See related issues in Van and Wan (1997).Google Scholar
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    After all, Basu (1997), Ray (1998) and Aghion and Howitt (1998) have done a fine job in these areas.Google Scholar
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    See for example, Mansfield et al. (1977).Google Scholar
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    In Ohkawa and Rosovsky (1973).Google Scholar

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© Springer Science+Business Media New York 2004

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  • Henry Y. WanJr.

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