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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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  13. Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 545-61, July.
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Citations

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Cited by:
  1. Wang, Zhi & Wei, Shang-Jin & Wong, Anna, 2010. "Does a Leapfrogging Growth Strategy Raise Growth Rate? Some International Evidence," Working Papers on Regional Economic Integration 47, Asian Development Bank.
  2. 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.
  3. 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 114705, European Association of Agricultural Economists.
  4. Justin Yifu Lin, 2012. "From Flying Geese To Leading Dragons: New Opportunities and Strategies for Structural Transformation in Developing Countries," Global Policy, London School of Economics and Political Science, vol. 3(4), pages 397-409, November.
  5. Ju, Jiandong & Lin, Justin Yifu & Wang, Yong, 2011. "Marshallian externality, industrial upgrading, and industrial policies," Policy Research Working Paper Series 5796, The World Bank.
  6. Uy, Timothy & Yi, Kei-Mu & Zhang, Jing, 2013. "Structural change in an open economy," Journal of Monetary Economics, Elsevier, vol. 60(6), pages 667-682.
  7. Sun Xuegong, . "China: Searching for a New Development Modal," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
  8. Che, Natasha Xingyuan, 2010. "Factor Endowment, Structural Change, and Economic Growth," MPRA Paper 22352, University Library of Munich, Germany.
  9. Natasha Xingyuan Che, 2012. "Factor Endowment, Structural Coherence, and Economic Growth," IMF Working Papers 12/165, International Monetary Fund.
  10. Liu, Yue, 2012. "Structural change with dynamics of capital income share," Economics Letters, Elsevier, vol. 116(3), pages 597-600.
  11. Lin, Justin Yifu & Sun, Xifang & Jiang, Ye, 2009. "Toward a theory of optimal financial structure," Policy Research Working Paper Series 5038, The World Bank.

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