Activation of a Modern Industry
17 Pages Posted: 31 Jan 2006
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: Suggested Citation