How the Dragon Captured the World Export Markets: Outsourcing and Foreign Investment Lead the Way

44 Pages Posted: 3 Dec 2004

See all articles by F. Gerard Adams

F. Gerard Adams

Northeastern University - D’Amore-McKim School of Business

Byron Gangnes

University of Hawaii - Department of Economics

Yochanan Shachmurove

City University of New York, CUNY City College of New York - Department of Economics; The University of Pennsylvania - Department of Economics

Date Written: December 2004

Abstract

This paper explores several theories regarding how China has become highly successful in capturing world export markets. The paper concludes that increased competitiveness is dependant on, but not limited to several factors discussed in detail including, exchange rate undervaluation, low wage rates and excess labor resources. Direct foreign investment which enabled China to produce products that meet world market specifications, brought new technology and foreign management, played a key factor. Reasons for China's advantage over other East Asian countries are explored. The merits and methods of various measures of China's competitiveness and comparative competitiveness are also discussed.

Keywords: China exports, comparative advantage, competitiveness, purchasing power parity, exchange rate, undervaluation, devaluation, international comparisons, foreign direct investment, technology

JEL Classification: F0, F1, O1, P0, R1

Suggested Citation

Adams, F. and Gangnes, Byron and Shachmurove, Yochanan, How the Dragon Captured the World Export Markets: Outsourcing and Foreign Investment Lead the Way (December 2004). PIER Working Paper No. 04-042. Available at SSRN: https://ssrn.com/abstract=629062 or http://dx.doi.org/10.2139/ssrn.629062

F. Adams

Northeastern University - D’Amore-McKim School of Business ( email )

39 Stafford Rd.
Boston, MA 02115
617-373-2764 (Phone)
617-373-8798 (Fax)

Byron Gangnes

University of Hawaii - Department of Economics ( email )

Honolulu, HI 96822
United States

Yochanan Shachmurove (Contact Author)

City University of New York, CUNY City College of New York - Department of Economics ( email )

160 Convent Avenue
New York, NY 10031
United States
212-650-6202 (Phone)

The University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-1090 (Phone)
215-573-2057 (Fax)

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