China's Business System And Comparative Advantage

The paper explores the linkage between characteristics of Chinese society and its business system to industry choice and possible comparative advantages in Chinese capitalism. The paper compares the institutional foundations of salient areas of comparative advantage of the United States and South Korea with institutional conditions in China to explore the potential for China to emulate the patterns of comparative advantage in either of these countries. The paper argues that China does not presently possess the institutional foundations to minor US comparative advantages and would seem to be unlikely to evolve these foundations over the next one or two decades. China would seem better positioned to build comparative advantages similar to those of South Korea, though questions remain about China's ability to overcome attendant institutional obstacles.