Two Stages of Economic Development

Gang Gong
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Gang Gong: Asian Development Bank Institute

No 628, ADBI Working Papers from Asian Development Bank Institute

Abstract: We suggest that the development process of a less-developed country can be divided into two stages, which demonstrate significantly different properties in areas such as structural endowments, production modes, income distribution, and the forces that drive economic growth. The two stages of economic development have been indicated in the growth theory of macroeconomics and in the various “turning point” theories in development economics, including Lewis’s dual economy theory, Kuznets curve, and the middle-income trap. A dynamic macroeconomic model is constructed to simulate the development process that reveals these two stages. Using the two-stage theory of economic development, we find that the People’s Republic of China’s economy is currently at the intersection between the first and second stages. This is the definition of “new normal” in the current Chinese economy.

Keywords: two stages of economic development; dual economy theory; Kuznets curve; economic growth; new normal (search for similar items in EconPapers)
JEL-codes: C61 C62 E10 O11 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2016-12-31
New Economics Papers: this item is included in nep-gro, nep-hpe, nep-mac and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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