Endowment Structures, Industrial Dynamics, and Economic Growth

43 Pages Posted: 20 Apr 2016

See all articles by Jiandong Ju

Jiandong Ju

University of Oklahoma - Department of Economics; Tsinghua University - PBC School of Finance

Justin Y. Lin

Peking University - China Center for Economic Research

Yong Wang

Hong Kong University of Science & Technology (HKUST)

Date Written: September 1, 2009

Abstract

This paper develops a dynamic general equilibrium model to explore industrial evolution and economic growth in a closed developing economy. The authors 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 finally disappears. While the industry is declining, a more capital-intensive industry appears and booms, 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.

Keywords: Economic Theory & Research, Political Economy, Economic Growth, Debt Markets, Emerging Markets

Suggested Citation

Ju, Jiandong and Lin, Justin Yifu and Wang, Yong, Endowment Structures, Industrial Dynamics, and Economic Growth (September 1, 2009). World Bank Policy Research Working Paper No. 5055, Available at SSRN: https://ssrn.com/abstract=1476697

Jiandong Ju (Contact Author)

University of Oklahoma - Department of Economics ( email )

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Tsinghua University - PBC School of Finance

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Beijing 100083
China

Justin Yifu Lin

Peking University - China Center for Economic Research ( email )

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Haidian District
Beijing, Beijing 100871
China

Yong Wang

Hong Kong University of Science & Technology (HKUST) ( email )

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Kowloon, 999999
Hong Kong

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