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Activation of a Modern Industry

  • Ping Wang


    (Department of Economics, Vanderbilt University and NBER)

  • Danyang Xie

    (International Monetary Fund and Hong Kong University of Science and Technology)

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 are provided.

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Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0135.

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Date of creation: Dec 2001
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Handle: RePEc:van:wpaper:0135
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  21. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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