Comparative Advantage and LatecomerAdvantage
Fan Gang* Peking
To achieve development, developing countries must capitalize on their relativeadvantages, including comparative advantage and latecomer advantages. A country mustdevelop an industrial structure that is consistent with the comparative advantage of itsfactor structure in order to avoid the trap of “structural catch-up” that stifles development.The issue for developing countries is that their comparative advantage in core factors ofproduction is unstable and tends to decrease and dissipate. Such a comparative advantagecannot provide adequate growth for convergence to occur. Developed countries, on theother hand, can sustain economic growth due to their comparative advantage in high-quality factors. Latecomer advantage refers to the ability of developing countries to increasetheir knowledge factor in a cost-effective manner by learning, importing, assimilating, andusing knowledge and technology that already exist. Although comparative and latecomeradvantages may have a combined effect, each has its distinct characteristics. Latecomeradvantage is a special development factor that applies to latecomers. It is crucial at allstages of development, but especially so in the middle-income stage and beyond. Bringinglatecomer advantage into full play is essential for developing nations to converge with theadvanced countries.