Catch-Up Cycle: A General Equilibrium Framework
Peilin, Liu; Shen, Jia; Zhang, Xun | February 2017
Certain stylized facts are common among successful economic latecomers: an inverse U-shaped gross domestic product and capital per capita growth rate, high growth rates during the catch-up period, and rapid structural changes. This paper, for the first time, proposes a general equilibrium framework to document the catch-up cycle that a successful latecomer is likely to experience. We argue that technology adoption and imitation, and the diminishing marginal returns to capital are the two driving forces of the catch-up cycle. The technological gap and speed/efficiency of technological catching-up are two fundamental factors for successful catching-up. This paper concludes with a case study for the People’s Republic of China and sheds light on the different policy choices in various stages of the catch-up cycle.
CitationPeilin, Liu; Shen, Jia; Zhang, Xun. 2017. Catch-Up Cycle: A General Equilibrium Framework. © Asian Development Bank Institute. http://hdl.handle.net/11540/8668.
Organization for Economic Cooperation and Development
Financial Services Industry
Communication in economic development
Barriers to entry
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