Social Sciences in China (Chinese Edition)

No.6, 2017

The Path of Technological Progress in Quasi-Frontier Economies and the Switch to Other Drivers: From “Catch-up Oriented” to “Competition Oriented”

(Abstract)

Huang Xianhai and Song Xueyin

Technological progress is not only fundamental driver of the economic growth of developing countries, but also a basic way of surmounting the potential “middle income trap.” Our empirical research, based on longitudinal panel data for 115 countries, uses the technological dimension to divide economies into those distant from the international frontier, quasi-frontier economies and frontier economies, constructing a Schumpeterian endogenous growth model which takes into account technological gaps and depicts the path of technological progress in non-frontier economics and the general mechanism underlying their switch to other economic drivers. Our findings show that for economies far from the international frontier, catch-up oriented technological progress addressing technological gaps can bring about rapid technological progress, but the expansion of competition may lead to a low-level competitive dilemma. In quasi-frontier economies, although catch-up oriented technological progress faces a potential “catch-up technology trap,” competition-led technological progress can avoid this trap and accelerate convergence with the international frontier. Governments have an important part to play in switching the driver of technological progress, evading the “catch-up technology trap” and thus facilitating rapid and sustainable economic growth.