Seizing the moment: As emerging economies evolve, they leave gaps for low income states to fill

How do low-income countries achieve growth trajectories that can elevate their citizens out of poverty? Policy matters, of course, but in this piece that we came across on the World Bank’s blog site , by Justin Yifu Lin, Vandanda Chandra, and Yan Wang, the authors show how low income states can benefit in the wake of the new-found prosperity of emerging states, like China, Brazil and India. In terms of what they call the Leading Dragon Phenomenon, they argue that as these states start to upgrade their industrial sectors and labour becomes more expensive, certain industries will migrate to lower income states where labour is less expensive and conducive to the creation of competitive manifacturing industries.  Their paper offers proof of how industries have historically shifted from one country to another and continue to do so even today. The challenge, obviously, is to forge a policy framework that will counter exploitation and, in time,  also allow these states to graduate to a new level of industrialisation that provides higher wages and improved living conditions.

 

 

 

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