An empirical analysis of China's dualistic economic development: 1965-2009

Ercolani, Marco G.; Wei, Zheng

Abstract

We analyze China's rapid economic development in the context of the dualistic development theory. Over the period 1965–2009, we find that China's economic growth is mainly attributable to the development of the non-agricultural (industrial and service) sector, driven by rapid labor migration and capital accumulation. We find that the sectoral reallocation of labor plays a significant role in promoting China's economic growth. Further, we find that the marginal productivity of agricultural labor stopped stagnating in 1978, which indicates that China entered quickly into phase two of economic development with the initiation of market reforms. Moreover, by 2009, the marginal productivity of labor has likely exceeded the institutional wage, as defined by the initially low average labor productivity, indicating that China may be now in the process of entering phase three of economic development.

Citation

Ercolani, M. G., & Wei, Z. (2011). An empirical analysis of China's dualistic economic development: 1965-2009. Asian Economic Papers, 10(3), https://doi.org/10.1162/ASEP_a_00108

• Journal Article Type: Article
• Acceptance Date: Jan 1, 2011
• Publication Date: Oct 30, 2011
• Deposit Date: Oct 27, 2017
• Publicly Available Date: Oct 31, 2017
• Journal: Asian Economic Papers
• Print ISSN: 1535-3516
• Electronic ISSN: 1535-3516
• Publisher: Massachusetts Institute of Technology Press
• Peer Reviewed: Peer Reviewed
• Volume: 10
• Issue: 3
• DOI: https://doi.org/10.1162/ASEP_a_00108
• Public URL: https://nottingham-repository.worktribe.com/output/708398
• Publisher URL: http://www.mitpressjournals.org/doi/abs/10.1162/ASEP_a_00108
• Additional Information: Copyright MIT Press.