Activation of a Modern Industry

17 Pages Posted: 31 Jan 2006

See all articles by Danyang Xie

Danyang Xie

Hong Kong University of Science & Technology (HKUST) - Department of Economics

Date Written: January 2002


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 is provided.

Keywords: industrial transformation, spillovers, subsistence

JEL Classification: D24, O14, D33

Suggested Citation

Xie, Danyang, Activation of a Modern Industry (January 2002). IMF Working Paper No. 02/15, Available at SSRN:

Danyang Xie (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

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