The Flying Geese Paradigm: Industrial Upgrade Strategy and Balanced Regional Development

Zhang Qizi
Institute of Industrial Economics, Chinese Academy of Social Sciences (CASS), Beijing

Abstract: On the basis of competency-based comparative advantage theory and reclassification of industries, this paper has discussed whether the FGP-type industry upgrade has taken place across different regions of China and whether China is able to transcend the middle-income trap through the FGP-type industry upgrade. This paper has discovered that no matter by traditional method of industry classification or the new method of industry classification, China has already experienced the FGP-type industry upgrade and entered into the second stage of this process. While relocating industries to central and western regions, China’s eastern region does not have clear directions of industry upgrade of its own. Through analysis on the evolution of comparative advantages across regions, this paper has also discovered that in the process of the FGP industry upgrade, China is facing the risk of falling into comparative advantage trap. These factors are unfavorable to China’s implementation of the FGP-type industry upgrade strategy, prevention of the comparative advantage interruptions that may confront middle-income countries and achievement of balanced regional development.
Keywords: The FGP-type industry upgrade, product space, comparative advantage

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