Analytical Analysis on Production and Cost.pdf

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AN EMPIRICAL ANALYSIS OF THE LEWIS-RANIS-FEI
THEORY OF DUALISTIC ECONOMIC
DEVELOPMENT FOR CHINA∗
MARCO G. ERCOLANI
Department of Economics, University of Birmingham, Edgbaston, B15 2TT, United
Kingdom. Tel. [phone]. E-mail [e-mail]
ZHENG WEI
University of Nottingham Ningbo China, 199 Taikang East Road, Ningbo, P.R. China,
315100. Tel: [phone] 0330, E-mail: [e-mail]

January 2010

Abstract
We employ the Lewis-Ranis-Fei theory of dualistic economic development as a framework to investigate China’s rapid growth over 1965-2002. We find that
China’s economic growth is mainly attributable to the development of the non-agricultural (industrial and service) sector, driven by rapid labour migration and capital accumulation. Our estimates of the sectoral marginal productivity of labour indicate that China’s 1978 Economic Reform coincided with moving from phase one to phase two growth, as defined in the Lewis-Ranis-Fei model.
This implies that phase three growth could be achieved by the commercialisation of the Chinese agricultural labour market. (95 words)

Keywords: agricultural, development, dualistic growth, labour migration, subsistence.
JEL classification: O14, O15, O18, O41, O47, O53.

∗

The first draft of this paper has been presented in the CES (Chinese Economist Society) 2007 Annual Conference in
Changsha, Hunan province, P.R. China. We are grateful to the constructive comments of conference participants.

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Table of Contents

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Introduction ............................................................................................................... 3
Literature survey ........................................................................................................ 6
2.1 The Lewis-Ranis-Fei model ............................................................................ 6
2.2 Relevant empirical studies

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