ABSTRACT
Every firm in a high-income market economy relies on the mere existence of countless other firms to keep prices competitive throughout densely interconnected supply chains. Without this network externality, no firm forms; and without many firms, no network forms. Escaping this low-income trap is a primary problem in launching rapid catch-up development. Business group governance supersedes corporate governance in catch-up development, today and historically. Business groups can roll out new firms and expand existing firms in the interests of the group as a whole, and are thus a uniquely advantageous governance structure for rapid catch-up economic development.
