Yes / Integrating and extending new growth theory and resource-based views, this paper provides a theoretical foundation for the catch-up hypothesis. It examines the role of technology gap, technological capability, and cultural proximity in local firms’ catch-up with MNEs. Hypotheses are developed and tested with a dynamic model on a large firm-level panel dataset from Chinese manufacturing. The results confirm that catch-up is positively related to technology gap and technological capability. Furthermore, in the presence of cultural proximity, the speed of local Chinese firms’ catch-up with MNEs from Hong Kong, Macau, and Taiwan is not significantly lower than that with other MNEs. / The National Natural Science Foundation of China (NSFC: 71302179 and 71240026); the Project of Humanities and Social Sciences, Ministry of Education, China (Project No. 11XJA630001), and the “211 project” of the Southwestern University of Finance and Economics.