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An Empirical Analysis of China's Dualistic Economic Development: 1965–2009

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  • Marco G. Ercolani

    (Department of Economics Birmingham Business School University of Birmingham Edgbaston, B15 2TT United Kingdom)

  • Zheng Wei

    (Nottingham University Business School University of Nottingham Ningbo China Ningbo, 315100, China)

Abstract

We analyze China's rapid economic development in the context of the dualistic development theory. Over the period 1965–2009, we find that China's economic growth is mainly attributable to the development of the non-agricultural (industrial and service) sector, driven by rapid labor migration and capital accumulation. We find that the sectoral reallocation of labor plays a significant role in promoting China's economic growth. Further, we find that the marginal productivity of agricultural labor stopped stagnating in 1978, which indicates that China entered quickly into phase two of economic development with the initiation of market reforms. Moreover, by 2009, the marginal productivity of labor has likely exceeded the institutional wage, as defined by the initially low average labor productivity, indicating that China may be now in the process of entering phase three of economic development. © 2011 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Marco G. Ercolani & Zheng Wei, 2011. "An Empirical Analysis of China's Dualistic Economic Development: 1965–2009," Asian Economic Papers, MIT Press, vol. 10(3), pages 1-29, Fall.
  • Handle: RePEc:tpr:asiaec:v:10:y:2011:i:3:p:1-29
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    Cited by:

    1. Peter C.Y. Chow, 2012. "Trade and Industrial Development in East Asia," Books, Edward Elgar Publishing, number 14167.
    2. Bonatti, Luigi & Fracasso, Andrea, 2013. "Regime switches in the Sino-American co-dependency: Growth and structural change in China," Structural Change and Economic Dynamics, Elsevier, vol. 25(C), pages 1-32.
    3. GOLLEY, Jane & WEI, Zheng, 2015. "Population dynamics and economic growth in China," China Economic Review, Elsevier, vol. 35(C), pages 15-32.
    4. ., 2012. "Conclusion," Chapters,in: Trade and Industrial Development in East Asia, chapter 10 Edward Elgar Publishing.

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