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Endowment structures, industrial dynamics, and economic growth

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  • Ju, Jiandong
  • Lin, Justin Yifu
  • Wang, Yong

Abstract

A growth model is developed to explain how the improvement in the endowment structure leads to industrial evolution in a closed developing economy. On the balanced growth path industries will endogenously upgrade toward the more capital-intensive ones in a continuous inverse-V-shaped pattern: As the capital-labor ratio reaches a certain threshold, a new industry appears, prospers, then declines and eventually replaced by a more capital-intensive industry, which also waxes and wanes in the same pattern, ad infinitum. Explicit solutions are obtained to fully characterize the whole dynamics of perpetual structural change and economic growth. Implications for industrial policies are discussed.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5055.

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Date of creation: 01 Sep 2009
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Handle: RePEc:wbk:wbrwps:5055

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Keywords: Economic Theory&Research; Political Economy; Economic Growth; Debt Markets; Emerging Markets;

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Citations

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Cited by:
  1. Lin, Justin Yifu, 2011. "From flying Geese to leading Dragons : new opportunities and strategies for structural transformation in developing countries," Policy Research Working Paper Series 5702, The World Bank.
  2. Sun Xuegong, . "China: Searching for a New Development Modal," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA), Economic Research Institute for ASEAN and East Asia (ERIA).
  3. Ju, Jiandong & Lin, Justin Yifu & Wang, Yong, 2011. "Marshallian externality, industrial upgrading, and industrial policies," Policy Research Working Paper Series 5796, The World Bank.
  4. Zhi Wang & Shang-Jin Wei & Anna Wong, 2010. "Does a Leapfrogging Growth Strategy Raise Growth Rate? Some International Evidence," NBER Working Papers 16390, National Bureau of Economic Research, Inc.
  5. Vandana Chandra & Justin Yifu Lin & Yan Wang, 2013. "Leading Dragon Phenomenon: New Opportunities for Catch-up in Low-Income Countries," Asian Development Review, MIT Press, vol. 30(1), pages 52-84, March.
  6. Kei-Mu Yi & Jing Zhang, 2010. "Structural Change in an Open Economy," Working Papers, Research Seminar in International Economics, University of Michigan 595, Research Seminar in International Economics, University of Michigan.
  7. Liu, Yue, 2012. "Structural change with dynamics of capital income share," Economics Letters, Elsevier, Elsevier, vol. 116(3), pages 597-600.
  8. Lin, Justin Yifu & Sun, Xifang & Jiang, Ye, 2009. "Toward a theory of optimal financial structure," Policy Research Working Paper Series 5038, The World Bank.
  9. Che, Natasha Xingyuan, 2010. "Factor Endowment, Structural Change, and Economic Growth," MPRA Paper 22352, University Library of Munich, Germany.
  10. Natasha Xingyuan Che, 2012. "Factor Endowment, Structural Coherence, and Economic Growth," IMF Working Papers 12/165, International Monetary Fund.
  11. Kopeva, Diana Ilieva & Shterev, Nikolay & Blagoev, Dimitar, 2011. "Comparison of Industrial Dynamics of Food and Beverage Industry in Bulgaria, Romania and Greece," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland, European Association of Agricultural Economists 114705, European Association of Agricultural Economists.

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