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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.

Suggested Citation

  • Marco G. Ercolani & Zheng Wei, 2010. "An Empirical Analysis of the Lewis-Ranis-FEi Theory of Dualistic Economic Development for China," Discussion Papers 10-06, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:10-06
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    References listed on IDEAS

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    1. Kwan, Yum K. & Chow, Gregory C., 1996. "Estimating Economic Effects of Political Movements in China," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 192-208, October.
    2. 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.
    3. Lewis, W Arthur, 1979. "The Dual Economy Revisited," The Manchester School of Economic & Social Studies, University of Manchester, vol. 47(3), pages 211-229, September.
    4. Gregory Chow, 2006. "Are Chinese Official Statistics Reliable?," CESifo Economic Studies, CESifo, vol. 52(2), pages 396-414, June.
    5. Zhang, Kevin Honglin & Song, Shunfeng, 2003. "Rural-urban migration and urbanization in China: Evidence from time-series and cross-section analyses," China Economic Review, Elsevier, vol. 14(4), pages 386-400.
    6. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    7. 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 1057-1072, June.
    8. Gregory C. Chow, 1993. "Capital Formation and Economic Growth in China," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 809-842.
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    12. John Knight, 2007. "China, South Africa and the Lewis Model," CSAE Working Paper Series 2007-12, Centre for the Study of African Economies, University of Oxford.
    13. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
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    Cited by:

    1. UNDP Regional Bureau for Africa, "undated". "An Econometric Investigation of the Causes of the Bifurcation of Within-Country Inequality Trends over 1991-2011 in sub-Saharan Africa," UNDP Africa Policy Notes 2017-17, United Nations Development Programme, Regional Bureau for Africa.
    2. repec:eee:energy:v:142:y:2018:i:c:p:215-227 is not listed on IDEAS

    More about this item

    Keywords

    agricultural; development; dualistic growth; labour migration; subsistence;

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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