IntroductionIn States versus Markets, Herman Schwartz presents two economic development strategies that have been employed by recent industrial developers to take advantage of existing comparative advantages or facilitate rapid growth industrial through state intervention and provision in order to gain a competitive position on world markets. Schwartz demonstrates how China was able to use elements of these development strategies to generate capital from an abundant supply of rural labor in order to pursue industrial development and attract foreign investment through economic reform that began in the late 1970s . This article will explain the theoretical framework of the Ricardian approach and Kaldorian development strategies and outline the historical details of China's economic reforms since the late 1970s. Schwartz's framework will then be applied to examine how China used Ricardian elements of comparative advantage to, initially, move towards Kaldorian development strategies to overcome Gerschenkronian collective action problems and promote industrial growth and foreign investment. This essay will examine Schwartz's assessment that China faces late-developer Kaldorian collective action problems in order to illustrate current and future challenges to China's economic development. Section 1: Theoretical Framework Ricardian Development Strategies According to Schwartz (2010), the successful implementation of Ricardian development strategies involves using existing comparative advantages, such as agricultural production or the export of other primary products, to stimulate economic development . This can also extend to low-value industrial activities such as textiles and clothing (59-60). These strategies are based on solving... middle of paper... nt. The great economic transformation of China (507-568). New York: Cambridge University Press.Coates, B., Horton, D., & McNamee, L. (2014, January 1). CHINA: EXPORT-ORIENTED GROWTH PROSPECTS. Economic Roundup Issue 4. Department of the Treasury (Australia). http://www.treasury.gov.au/PublicationsAndMedia/Publications/2012/Economic-Roundup-Issue-4/HTML/article4Heiduk, G., & McCaleb, A (2012). China's competitiveness in international trade: The impact of innovation and human capital – Empirical literature review. WORLD ECONOMY RESEARCH INSTITUTE, 310.Krugman, P. (2013, July 18). Hitting the Chinese Wall. The New York Times.Wignaraja, G. (2012) . Do exporting enterprises in the People's Republic of China innovate? ADBI Working Paper 365. Tokyo: Asian Development Bank Institute. Available: http://www.adbi.org/working-paper/2012/07/03/5135.exporting.firm.prc.innovate