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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.

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Bibliographic Info

Paper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 10-06.

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Length: 40 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:bir:birmec:10-06

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Postal: Edgbaston, Birmingham, B15 2TT
Web page: http://www.economics.bham.ac.uk
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Keywords: agricultural; development; dualistic growth; labour migration; subsistence;

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  1. Putterman, Louis, 1992. "Dualism and Reform in China," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 467-93, April.
  2. Chow, G.C., 1990. "Capital Formation And Economic Growth In China," Papers 356, Princeton, Department of Economics - Econometric Research Program.
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  8. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
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  10. Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990. "Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?," Papers 8905, Michigan State - Econometrics and Economic Theory.
  11. Yasmina Reem Limam & Stephen M. Miller, 2004. "Explaining Economic Growth: Factor Accumulation, Total Factor Productivity Growth, and Production Efficiency Improvement," Working papers 2004-20, University of Connecticut, Department of Economics.
  12. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, October.
  13. Gregory Chow, 2006. "Are Chinese Official Statistics Reliable?," CESifo Economic Studies, CESifo, vol. 52(2), pages 396-414, June.
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