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Endowment Structure, Industrial Dynamics, and Economic Growth

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  • Yong Wang

    (Hong Kong University of Science and Technology)

  • Justin Yifu Lin

    (the World Bank)

  • Jiandong Ju

    (Tsinghua University and University of Oklahoma)

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.

Suggested Citation

  • Yong Wang & Justin Yifu Lin & Jiandong Ju, 2010. "Endowment Structure, Industrial Dynamics, and Economic Growth," 2010 Meeting Papers 679, Society for Economic Dynamics.
  • Handle: RePEc:red:sed010:679
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    Cited by:

    1. Liu, Yue, 2012. "Structural change with dynamics of capital income share," Economics Letters, Elsevier, vol. 116(3), pages 597-600.
    2. Xi Li & Xuewen Liu & Yong Wang, 2015. "A Model of China's State Capitalism," HKUST IEMS Working Paper Series 2015-12, HKUST Institute for Emerging Market Studies, revised Feb 2015.
    3. 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.
    4. 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.
    5. Che, Natasha Xingyuan, 2010. "Factor Endowment, Structural Change, and Economic Growth," MPRA Paper 22352, University Library of Munich, Germany.
    6. Huang, Hanwei & Ju, Jiandong & Yue, Vivian Z., 2017. "Structural adjustments and international trade: theory and evidence from China," LSE Research Online Documents on Economics 86601, London School of Economics and Political Science, LSE Library.
    7. Justin Yifu Lin, 2013. "New structural economics: the third wave of development thinking," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(2), pages 1-13, November.
    8. 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.
    9. 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.
    10. repec:spr:anresc:v:60:y:2018:i:2:d:10.1007_s00168-017-0816-7 is not listed on IDEAS
    11. Ju, Jiandong & Lin, Justin Yifu & Wang, Yong, 2011. "Marshallian externality, industrial upgrading, and industrial policies," Policy Research Working Paper Series 5796, The World Bank.
    12. 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.
    13. Lin, Justin Yifu & Sun, Xifang & Jiang, Ye, 2009. "Toward a theory of optimal financial structure," Policy Research Working Paper Series 5038, The World Bank.
    14. Natasha X Che, 2012. "Factor Endowment, Structural Coherence, and Economic Growth," IMF Working Papers 12/165, International Monetary Fund.
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    17. Hanwei Huang & Jiandong Ju & Vivian Z. Yue, 2017. "Structural Adjustments and International Trade: Theory and Evidence from China," CEP Discussion Papers dp1508, Centre for Economic Performance, LSE.

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