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China's business system and comparative advantage

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We explore the linkage between the characteristics of Chinese society and its business system to industry choice and possible comparative advantages in Chinese capitalism. We compare 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. We argue that China does not presently possess the institutional foundations to mirror US comparative advantages and would seem to be unlikely to evolve these foundations over the next decade or two. China would seem better positioned to build comparative advantages similar to those of South Korea, although questions remain about China's ability to overcome attendant institutional obstacles.

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