Endowment Structure, Industrial Dynamics, and Economic Growth

Yong Wang, Justin Lin () and Jiandong Ju

No 679, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: A growth model is developed to explain how the improvement in the endowment structure leads to industrial evolution in a closed developing economy. On the balanced growth path industries will endogenously upgrade toward the more capital-intensive ones in a continuous inverse-V-shaped pattern: As the capital-labor ratio reaches a certain threshold, a new industry appears, prospers, then declines and eventually replaced by a more capital-intensive industry, which also waxes and wanes in the same pattern, 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.

Date: 2010
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Related works:
Journal Article: Endowment structures, industrial dynamics, and economic growth (2015)
Working Paper: Endowment structures, industrial dynamics, and economic growth (2009)
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