THE SEARCH FOR DETERMINANTS OF CATCHING UP - THEORY, THE EAST-ASIAN EXPERIENCE AND THE CHINESE CASE

This paper aims to develop a framework to identify the key determinant s of a country's growth in late development and apply the framework to analyze the case of China. I analyze the possible necessary and suffi cient conditions for catching up. The analyses suggest that an adequat e location, initial human capital and institutional arrangements are a mong the key determinants; for the majority of developing countries, i nstitutional arrangements alone dictate catching up or not. If the ins titutional arrangements are efficient, then a follower can achieve wha t I term long-term potential growth rate provided that thew exists an adequate location and initial human capital. The experience of Japan a nd the East Asian newly industrializing economies is evaluated in the framework. Based on the framework of catching up and the experience of East Asia, the Chinese case is analyzed. The analyses suggest with hi gh probability that China will sustain high growth and get close to it s long-term potential growth rate in the coming decades: 7-10% annuall y in the next 15 years and 5-7% annually in the following 15 years.