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Activation of a Modern Industry

  • Danyang Xie
  • Ping Wang

This paper constructs an integrated framework to disentangle the underlying economic mechanism of industrial transformation. We consider three essential elements for the analysis: skill requirements, industry-wide spillovers, and degrees of consumption subsistence. We find that human and nonhuman resources, production factor matching, and industrial coordination are all important for activating a modern industry. In the process of industrial transformation, job destruction may exceed job creation, and income distribution may get worse immediately following the activation of a modern industry. An array of policy prescriptions for advancing a poor country is provided.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/15.

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Length: 17
Date of creation: 01 Jan 2002
Date of revision:
Handle: RePEc:imf:imfwpa:02/15
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  1. Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
  3. Benhabib, J. & Farmer, R.E.A, 1991. "Indeterminacy and Increasing Returns," Papers 165, Cambridge - Risk, Information & Quantity Signals.
  4. Jovanovic, B., 1998. "Vintage Capital and Equality," Working Papers 98-16, C.V. Starr Center for Applied Economics, New York University.
  5. Kiminori Matsuyama, 1999. "The Rise of Mass Consumption Societies," Discussion Papers 1289, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  6. Peretto, Pietro F., 1999. "Industrial development, technological change, and long-run growth," Journal of Development Economics, Elsevier, vol. 59(2), pages 389-417, August.
  7. Stephen L. Parente & Edward C. Prescott, 1997. "Monopoly rights: a barrier to riches," Staff Report 236, Federal Reserve Bank of Minneapolis.
  8. Chow, G.C., 1990. "Capital Formation And Economic Growth In China," Papers 356, Princeton, Department of Economics - Econometric Research Program.
  9. Goodfriend, Marvin & McDermott, John, 1995. "Early Development," American Economic Review, American Economic Association, vol. 85(1), pages 116-33, March.
  10. Jovanovic, B., 1998. "Vintage Capital and Equality," Working Papers 98-16, C.V. Starr Center for Applied Economics, New York University.
  11. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
  12. Kaneda Mitsuhiro, 1995. "Industrialization under Perfect Foresight: A World Economy with a Continuum of Countries," Journal of Economic Theory, Elsevier, vol. 66(2), pages 437-462, August.
  13. Lucas, Robert E, Jr, 1993. "Making a Miracle," Econometrica, Econometric Society, vol. 61(2), pages 251-72, March.
  14. Horrell, Sara, 1996. "Home Demand and British Industrialization," The Journal of Economic History, Cambridge University Press, vol. 56(03), pages 561-604, September.
  15. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  16. Young, Alwyn, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 369-405, May.
  17. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  18. Eric W. Bond & Ronald W. Jones & Ping Wang, 2005. "Economic Takeoffs in a Dynamic Process of Globalization," Review of International Economics, Wiley Blackwell, vol. 13(1), pages 1-19, 02.
  19. Chen, Been-Lon & Shimomura, Koji, 1998. "Self-Fulfilling Expectations and Economic Growth: A Model of Technology Adoption and Industrialization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 151-70, February.
  20. Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 545-61, July.
  21. repec:fth:starer:9816 is not listed on IDEAS
  22. Erik Thorbecke & An-Chi Tung & Henry Wan, Jr, 2002. "Industrial Targeting: Lessons from Past Errors and Successes of Hong Kong and Taiwan," The World Economy, Wiley Blackwell, vol. 25(8), pages 1047-1061, 08.
  23. Dowrick, Steve & Gemmell, Norman, 1991. "Industrialisation, Catching Up and Economic Growth: A Comparative Study across the World's Capitalist Economies," Economic Journal, Royal Economic Society, vol. 101(405), pages 263-75, March.
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