Catch‐up industrial policy and economic transition in China
Bibliographic Data
| ID | 21543633 |
|---|---|
| Authors | Julia Y Lin (0000-0003-0518-9829, Peking University), Justin Yifu Lin (Institute of New Structural Economics Peking University Beijing China), Wei Wang (0000-0001-5806-2368, School of International Trade and Economics University of International Business and Economics Beijing China, corresponding author), Venite Zhaoyang Xu (School of International Trade and Economics University of International Business and Economics Beijing China) |
| Year | 2021 |
| Volume | 44 |
| Issue | 3 |
| Pages | 602-632 |
| Publication date | 2021-03-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | World Economy (JOURNAL) |
| Journal identifiers | ISSN: 0378-5920 • E-ISSN: 1467-9701 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/twec.13046 |
| OpenAlex | W3089716628 |
| Language | EN |
| Citations received | 2 |
| References cited | 69 |
This paper studies how catch‐up industrial policies in China affect economic development in a two‐sector neoclassical growth model. To fulfil their aspirations of catching up with the output of the capital‐intensive sector of developed countries, Chinese political leaders adopted industrial policies that subsidise this target sector at the expense of other sectors from 1952 until the economic reform in 1978. The static effect of this industrial policy distorts the allocation of resources across sectors and lowers the aggregate TFP. The dynamic effect discourages the accumulation of capital. We show that although the output of the capital‐intensive sector boosts initially, it will be lower than its first‐best counterpart in the long run if catch‐up aspirations are too strong. Our theoretical predictions are consistent with the experience of the Chinese economy from 1952 to 1978
Capital deepening · Capital formation · China · Economic reform · Economic sector · Economic system · Economics · Economy · Financial capital · Human capital · Industrial policy · Macroeconomics · Market economy · Politics · Secondary sector of the economy · China's Socioeconomic Reforms and Governance · Economic Growth and Productivity · Fiscal Policy and Economic Growth
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| Unique citing works | 2 |
|---|---|
| Citations per year | 2 |
| Citation span | 2025 - 2025 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 2 |