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.
| Original language | English |
|---|---|
| Pages (from-to) | 393-410 |
| Number of pages | 18 |
| Journal | Journal of Development Economics |
| Volume | 74 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - Aug 2004 |
| Externally published | Yes |
Keywords
- Consumption subsistence
- Factor matching
- Industrial transformation
- Marshallian externality
