Activation of a Modern Industry

Danyang Xie and Ping Wang

No 2002/015, IMF Working Papers from International Monetary Fund

Abstract: 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: WP; developing country; luxury good; economic development; full employment; utility function; industrial transformation; spillovers; subsistence; capital allocation constraint; labor reallocation; capital funding; reallocation constraint; cost differential; capital-labor complementarity; capital input; labor input; Unemployment; Skilled labor; Wages; Employment; East Asia (search for similar items in EconPapers)
Pages: 17
Date: 2002-01-01
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Related works:
Journal Article: Activation of a modern industry (2004)
Working Paper: Activation of a Modern Industry (2001)
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