Please use this identifier to cite or link to this item: http://hdl.handle.net/1783.1/6898

Endowment Structure, Industrial Dynamics, and Economic Growth

Authors Ju, Jiandong
Lin, Justin Yifu
Wang, Yong
Issue Date 2009-07
Summary This paper develops a dynamic general equilibrium model to explore industrial evolution and economic growth in a closed developing economy. We show that industries will endogenously upgrade toward the more capital-intensive ones as the capital endowment becomes more abundant. The model features a continuous inverse-V-shaped pattern of industrial evolution driven by capital accumulation: As the capital endowment reaches a certain threshold, a new industry appears, prospers, then declines and …nally disappears. While the industry is declining, a more capital-intensive industry appears and booms, ad in…nitum. Explicit solutions are obtained to fully characterize the whole dynamics of perpetual structural change and economic growth. Implications for industrial policies are discussed.
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Language English
Format Working paper
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