Activation of a Modern Industry

IMF Working Papers, January 1, 2002

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Activation of a Modern Industry

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Bibliographic details

• Authors: Danyang Xie
• Published: January 1, 2002
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451843279.001

Summary

• This paper constructs an integrated framework to disentangle the underlying economic mechanism of industrial transformation.
• The analysis considers three essential elements: skill requirements, industry-wide spillovers, and degrees of consumption subsistence.
• The paper finds that human and nonhuman resources, production factor matching, and industrial coordination are all important for activating a modern industry.
• During industrial transformation:
  • Job destruction may exceed job creation.
  • 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.

Major findings and analytical elements

• Elements considered:
  • Skill requirements
  • Industry-wide spillovers
  • Degrees of consumption subsistence
• Determinants of successful activation:
  • Human resources
  • Nonhuman resources
  • Production factor matching
  • Industrial coordination
• Transitional dynamics:
  • Possibility that job destruction exceeds job creation during activation.
  • Immediate deterioration of income distribution following activation.

Policy prescriptions (as described)

• The paper provides an array of policy prescriptions aimed at advancing a poor country through industrial activation. (Specific prescriptions are presented in the paper.)

Subject classification and keywords

• Subject: Employment, Labor, Skilled labor, Unemployment, Wages
• Keywords: capital allocation constraint, capital funding, capital input, capital-labor complementarity, cost differential, developing country, East Asia, economic development, Employment, full employment, industrial transformation, labor input, labor reallocation, luxury good, reallocation constraint, Skilled labor, spillovers, subsistence, Unemployment, utility function, Wages, WP

Content in this bundle

• Activation of a Modern Industry - WP/02/15
  • Activation of a Modern Industry - WP/02/15 (Markdown version)
  • Activation of a Modern Industry - WP/02/15 (PDF)