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Lewis Growth Model and China's Industrialization

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  • Nazrul Islam
  • Kazuhiko Yokota

Abstract

This paper examines China's industrialization in the light of the Lewis growth model. It begins with a perusal of Lewis's own writings and those of Fei and Ranis to clarify certain assumptions and predictions of the Lewis model. The paper then reviews previous applications of the Lewis model in studying industrialization of other countries, and notes the methodological problems that arise in this regard. In applying the Lewis model to study China's industrialization, the paper focuses on the dynamic relationship between wage and marginal product of labor in the traditional sector. For this purpose, the paper estimates a production function for China's agricultural sector using province level data and compares the estimated marginal product of labor with the corresponding wage of the sector. The results show that the marginal product has been increasing (from below) at a faster pace than the wage, as is predicted by the Lewis model. The results indicate that China as a whole is steadily moving toward the Lewis Turning Point. Copyright 2008 The Authors. Journal compilation 2008 East Asian Economic Association and Blackwell Publishing Ltd.

Suggested Citation

  • Nazrul Islam & Kazuhiko Yokota, 2008. "Lewis Growth Model and China's Industrialization ," Asian Economic Journal, East Asian Economic Association, vol. 22(4), pages 359-396, December.
  • Handle: RePEc:bla:asiaec:v:22:y:2008:i:4:p:359-396
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    Cited by:

    1. Knight, John & Deng, Quheng & Li, Shi, 2011. "The puzzle of migrant labour shortage and rural labour surplus in China," China Economic Review, Elsevier, vol. 22(4), pages 585-600.
    2. Prema-chandra Athukorala & Zheng Wei, 2015. "Economic Transition and Labour Market Dynamics in China: An Interpretative Survey of the ‘Turning Point’ Debate," Departmental Working Papers 2015-06, The Australian National University, Arndt-Corden Department of Economics.
    3. Golley, Jane & Meng, Xin, 2011. "Has China run out of surplus labour?," China Economic Review, Elsevier, vol. 22(4), pages 555-572.
    4. GOLLEY, Jane & WEI, Zheng, 2015. "Population dynamics and economic growth in China," China Economic Review, Elsevier, vol. 35(C), pages 15-32.
    5. repec:eee:chieco:v:48:y:2018:i:c:p:244-257 is not listed on IDEAS

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