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Structural transformation in China and India: A note on macroeconomic policies

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  • Rada, Codrina
  • von Arnim, Rudiger

Abstract

This paper explores macroeconomic policies that can sustain structural change in China and India. A two-sector open-economy model with endogenous productivity growth, demand driven output and income distribution as an important determinant of economic activity is calibrated to a 2000 SAM for China and a 1999/2000 SAM for India. Short-run analysis concerns temporary equilibria for output, productivity and employment growth rates in the formal sector. In the long-run, the model allows for multiple equilibria which can describe cases of (a) underdevelopment and structural heterogeneity or (b) sustained growth and development. Several simulation exercises are conducted. Specifically, we consider how changes in investment, wages, labor productivity trend and a depreciation of currency affect the macroeconomy and job creation in the formal sector.

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  • Rada, Codrina & von Arnim, Rudiger, 2012. "Structural transformation in China and India: A note on macroeconomic policies," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 264-275.
    • Handle: RePEc:eee:streco:v:23:y:2012:i:3:p:264-275
    DOI: 10.1016/j.strueco.2012.03.006
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    Cited by:

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    3. Godin, Antoine, 2014. "Job Guarantee: a Structuralist Perspective," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 16.
    4. Raúl Vázquez López, 2016. "Do Technology-Intensive Activities Drive Industrial Labor Productivity Levels?," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 123-150, November.
    5. Waseem Khan & Sana Fatima, 2016. "An Assessment of Sectoral Dynamics and Employment Shift in Indian and Chinese Economy," South Asian Survey, , vol. 23(2), pages 119-134, September.
    6. Sanjay Kumar Rout & Hrushikesh Mallick, 2021. "International interdependency of macroeconomic activities: a multivariate empirical analysis," International Economics and Economic Policy, Springer, vol. 18(2), pages 425-450, May.
    7. Norbu, Nyingtob Pema & Tateno, Yusuke & Bolesta, Andrzej, 2021. "Structural transformation and production linkages in Asia-Pacific least developed countries: An input-output analysis," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 510-524.
    8. von Arnim, Rudi & Tröster, Bernhard & Staritz, Cornelia & Raza, Werner, 2015. "Commodity dependence and price volatility in least developed countries: A structuralist computable general equilibrium model with applications to Burkina Faso, Ethiopia and Mozambique," Working Papers 52, Austrian Foundation for Development Research (ÖFSE).
    9. Varun Kumar Das & A. Ganesh-Kumar, 2019. "Off-the-farm livelihood choice of farm households in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-032, Indira Gandhi Institute of Development Research, Mumbai, India.
    10. von Arnim, Rudiger & Tröster, Bernhard & Staritz, Cornelia & Raza, Werner, 2018. "Commodity price shocks and the distribution of income in commodity-dependent least-developed countries," Journal of Policy Modeling, Elsevier, vol. 40(2), pages 434-451.
    11. Junwei Shi & Haiyan Fu, 2017. "Has The Industrial Structure Of Western Provinces In China Been Differential? Evidence From The Sip Framework," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(04), pages 905-928, September.

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    More about this item

    Keywords

    Structural change; Endogenous productivity; Dual economy; China; India;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy

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