Theories of the development of analogical reasoning emphasize either the centrality of relational knowledge accretion or changes in information processing. Recent cross-cultural data collected from children in the United States and China (Richland, Chan, Morrison, & Au, 2010) provides a unique way to test these theories. Here we use simulations in LISA/DORA (Doumas, Hummel, & Sandhofer, 2008; Hummel & Holyoak, 1997, 2003), a neurally-plausible computer model of relational learning and analogical reasoning, to argue that the development of analogical reasoning in children may best be conceptualized as an equilibrium between knowledge accretion and progressive improvement in information processing capability. Thus, improvements in inhibitory control in working memory as children mature enable them to process more relationally complex analogies. At the same time, however, children produce more complex and more accurate analogies in domains in which they have learned richer and more refined representations of relational concepts.