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An Empirical Analysis of the Lewis-Ranis-FEi Theory of Dualistic Economic Development for China

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  • Marco G. Ercolani
  • Zheng Wei

Abstract

We employ the Lewis-Ranis-Fei theory of dualistic economic development as a framework to investigate China's rapid growth over 1965-2002. We find that China's economic growth is mainly attributable to the development of the non-agricultural (industrial and service) sector, driven by rapid labour migration and capital accumulation. Our estimates of the sectoral marginal productivity of labour indicate that China's 1978 Economic Reform coincided with moving from phase one to phase tow growth, as defined in the Lewis-Ranis-Fei model. This implies that phase three growth could be achieved by commercialisation of the Chinese agricultural labour market.

Suggested Citation

  • Marco G. Ercolani & Zheng Wei, 2010. "An Empirical Analysis of the Lewis-Ranis-FEi Theory of Dualistic Economic Development for China," Discussion Papers 10-06, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:10-06
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    2. Cornia, Giovanni Andrea, 2017. "Income Inequality Trends in sub-Saharan Africa: Divergence, determinants and consequences: An Econometric Investigation of the Causes of the Bifurcation of within-Country Inequality Trends over 1991-2," UNDP Africa Reports 267777, United Nations Development Programme (UNDP).
    3. UNDP Regional Bureau for Africa, "undated". "An Econometric Investigation of the Causes of the Bifurcation of Within-Country Inequality Trends over 1991-2011 in sub-Saharan Africa," UNDP Africa Policy Notes 2017-17, United Nations Development Programme, Regional Bureau for Africa.
    4. Sakib Bin Amin & Farhan Khan & Mashiyat Rafa Khan & Jaahin Azam Oyishi, 2023. "The dual economy paradox: the case of Bangladesh and India," SN Business & Economics, Springer, vol. 3(9), pages 1-22, September.
    5. Dong, Xiao-Ying & Hao, Yu, 2018. "Would income inequality affect electricity consumption? Evidence from China," Energy, Elsevier, vol. 142(C), pages 215-227.
    6. Felix Joseph Chille, CBE & Michael John Haule, AIA, 2020. "Influence of Urbanization on Street Vending Business in Dar es Salaam and Coast Regions of Tanzania," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(9), pages 326-332, September.

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    More about this item

    Keywords

    agricultural; development; dualistic growth; labour migration; subsistence;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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