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Looking Inward for Growth


  • Rod Tyers

    (Business School, University of Western Australia)


Export led growth has been very effective in transforming China’s economy and establishing a large high-saving middle class. Notwithstanding political opposition from trading partners, this growth strategy has also offered the rest of the world an improved terms of trade and cheaper finance. Yet it is believed by China’s government that this convenient strategy has run its course and the transition has begun to a model that “looks inward” for growth, to be driven by expanding consumption and home investment. This paper uses a numerical model of the Chinese economy with oligopoly behaviour to examine the available “inward” sources of transformative growth along with the policies needed to exploit them. Success will require the redistribution of the considerable rents now accruing to connections of key state owned enterprises, suggesting the potential for political resistance and the yet-avoidable possibility that China could fall into a “middle incometrap”.

Suggested Citation

  • Rod Tyers, 2012. "Looking Inward for Growth," Economics Discussion / Working Papers 12-04, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:12-04

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    References listed on IDEAS

    1. Balistreri, Edward J. & Hillberry, Russell H. & Rutherford, Thomas F., 2011. "Structural estimation and solution of international trade models with heterogeneous firms," Journal of International Economics, Elsevier, vol. 83(2), pages 95-108, March.
    2. Don, H. & Gunasekera, B. H. & Tyers, Rod, 1990. "Imperfect competition and returns to scale in a newly industrialising economy : A general equilibrium analysis of Korean trade policy," Journal of Development Economics, Elsevier, vol. 34(1-2), pages 223-247, November.
    3. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2007. "Direct Investment, Rising Real Wages and the Absorption of Excess Labor in the Periphery," NBER Chapters,in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 103-132 National Bureau of Economic Research, Inc.
    4. Golley, Jane & Meng, Xin, 2011. "Has China run out of surplus labour?," China Economic Review, Elsevier, vol. 22(4), pages 555-572.
    5. C. Fred Bergsten & Charles Freeman & Nicholas R. Lardy, 2009. "China's Rise: Challenges and Opportunities," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4341.
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