Escolar Documentos
Profissional Documentos
Cultura Documentos
Chapter 4
I. Concepts
Chapter 4
I. Concepts
1. Economic structure
2. Industrial structure
Chapter 4
1. Economic structure
The relationship between different parts of the whole economy Classification of economic structure:
Industrial structure Regional structure Ownership structure Institutional structure Saving and investment structure International trade structure ...
Chapter 4 4
Industrial structure
Chapter 4
Sectoral share of GDP-2003 (%) Groups of countries High-income Middle-income Low-income Agri 2 11 25 Industry 27 38 25 Service 71 51 50
VN-2003
VN-1980
22
50
40
23
38
27
Source: WDR-2005
Chapter 4 6
Industrial structure of VN
% A I S 1990 38.7 22.7 38.6 1995 2000 2003 Labor 65.6 13.5 20.9
GDP Labor GDP Labor GDP Labor GDP 73.0 27.2 11.2 28.8 15.8 44.0 71.3 24.5 11.4 36.7 17.3 38.8 68.2 21.8 12.1 39.9 7 19.7 38.2 3
Regional structure
Natural pop growth rate Low-income Middle-income High-income VN 2.0 1.7 0.6 1.7 Urban pop growth rate 3.9 2.8 0.8 2.5
Household
Foreign investment sector
36.02
6.30
32.31
13.28
29.91
15.99
29.61
17.66
Source: GSO
Chapter 4
Institutional structure
Government sector Financial sector Non-financial sector Household sector Non-profit sector ...
Chapter 4
10
2002 71.33
2004 71.47
2006 69.38
2007 70.92
Source: GSO
Chapter 4
11
Export Import
2001
2002
2003
2004
2005
2006
2007
55.03 54.61 56.79 59.29 65.74 69.36 73.56 76.79 57.5 56.89 61.96 67.65 73.29 73.54 78.61 90.22 Source: GSO
Chapter 4
12
2. Industrial Structure
Different classifications; commonly: - Agriculture - Industry - Service Indices: Number of sectors Sectoral share of GDP Sectoral share of labor Sectoral share of capital
Chapter 4 13
Chapter 4
14
Chapter 4
15
1. Engels law
Agri. goods (food): ...... goods (eX,I .......) Proportion of income spent on food:......................................................
Prove mathematically the above argument: If Sx=xpx/I then dSx/dI < 0 in which x=quantity of agri. food, px= price of agri. food, I = total income
Chapter 4 16
Engels Law
Food consumption
Income
Chapter 4
17
Chapter 4
18
Source: http://www.child-centre.it/papers/child28_2001.pdf
Chapter 4 19
2. Fishers law on substitution of labor by technology In agriculture: relatively easy so that agricultural
Chapter 4
20
GDP / capita
100 1000
Share of GDP % A
50 20
I
10 40
S
40 40
10000
Vietnam
5
20.4
35
41.5
60
38.1
80
52 (2006)
Chapter 4
21
Sierra Leone Kenya Algeria Botswana Costa Rica Argentina Russia Taiwan France
70 81 11 28 20 6 7 3 4
14 7 37 11 22 32 34 33 25
16 12 52 61 58 62 59 64 71
Netherlands
4
Chapter 4
23
73
24970
22
% DV
% NN
Y/N
Chapter 4
23
The UK
Chapter 4
24
The US
Chapter 4
25
Japan
Chapter 4
26
GDP at current prices by economic sector Year 1990 1991 1992 1993 Agri 38.74 40.49 33.94 29.87
Vietnam
Indus. 22.67 23.79 27.26 28.90 Service 38.59 35.72 38.80 41.23
1994
1995 1996 1997
27.43
27.18 27.76 25.77
28.87
28.76 29.73 32.08
43.70
44.06 42.51 42.15
1998
1999 2000 2001 2002 2003 2004 2005 2006
25.78
25.43 24.53 23.24 23.03 22.54 21.81 20.97 20.40
Chapter 4
32.49
34.50 36.73 38.13 38.49 39.47 40.21 41.02 41.54
41.73
40.07 38.74 38.63 38.48 37.99 37.98 38.01 38.06
27
Prel. 2007
20.30
41.58
38.12
III. Commons in the change in industrial structure Share of GDP: Agriculture Industry-Agriculture Industry-service-agriculture Service-industryagriculture Share of labor: decline in agriculture, increase in industry and service Growth rate: Service > Industry Different countries tend to move in the same direction but at different speed.
Chapter 4 28
IV. Models of change in industrial structure 1. 2. 3. 4. Rostow model Dual economy model Neo-classical dual economy model Oshima model
Chapter 4
29
1. Rostow model
Traditional society Preconditions for take off Take off Drive to maturity High mass consumption
Chapter 4
30
Traditional Society Subsistence economy dominated by agriculture, which is labor intensive and uses limited quantities of capital
Trade is by barter
Take off
Industrialization increases may cause large scale ruralurban migration Growth is concentrated in few regions and in few industries New institutions evolve to support industrialization
Drive to maturity
Growth is diverse supported by technological innovation Economic development spread to all parts of country A more complex transport system develops Increase in number and new types of industries; early industries decline Continued rapid urbanization Investment is high: 40-60 % of GDP Industrial structure: Industry-Service-Agriculture
Chapter 4 34
Chapter 4
35
Arthur Lewis (1954) 2 sectors of the economy:........................................ Assumptions: Industrial sector: w =.............................................. Agri. sector: w = .................................................... Characteristics of excess labor in agri.: ................ Mechanism of the labor supply: ............................
Chapter 4
36
SL' D1 D0 G F H
SL
S O1
T
W
O2
A R B Q
Chapter 4
Agricultural output
37
What is T point:........................................
What is S point:.......................................
What is the difference between Lewis and Lewis-Fei-Ranis models: ........................... ................................................................ ............................................................
Chapter 4 38
Chapter 4
39
Chapter 4
40
Moshe Sirquin (1989) in the Proceedings of the Eighth World Congress of the International Economic Association reports the results of an analysis of about 100 countries ranging from some of the poorest economies to the industrial market economies over the period 1950-1983: While industry generated progressively larger fractions of national income in both groups of countries in their respective phases of industrialization, the secondary sector in the less developed countries failed to absorb labor in proportionate numbers.
Chapter 4
41
2) Surplus labor exists in rural areas, while there is full employment in urban areas.
However, this assumption is not valid: little surplus labor in the rural, excess labor can be in the urban; jobs can be created in the rural and migration is not always.
3) Industrialists do not have to increase wage paid to workers coming from agricultural sector
However, wage in industrial sector is always higher because: workers are more skillful; and pressure from Trade unions.
Chapter 4 42
3. Neo-classical dual economy model Criticize the classical dual economy model:
Labor surplus; MPL in agriculture >0 impossible to move labor to the industry without reducing agricultural output; WL in agricultural sector = MPL No horizontal part in the concave O2ABR curve like in the Lewis-Fei-Ranis model; Labor supply in industry is upward slopping
Chapter 4 43
Agricultural output
TPa
O2
Chapter 4
La
44
W SL
L
Chapter 4 45
SLm
DLm
Lm
Chapter 4 46
W in industrial sector is higher than in agricultural sector to attract workers. W in industrial sector is increasing: Labor leaves agricultural sector - MPL increases. Agricultural output decreases food price increases.
Chapter 4
47
Investment policies
Invest in industrial and agricultural sectors simultaneously prevent agricultural output from declining, food price from increasing, and w from increasing.
Labor-saving investment in industry reduce labor demand. MPLa is decreasing gradually lower investment in agriculture and raise investment in industry.
Chapter 4 48
Criticize Ricardo: impossible to import food Criticize Lewis: labor is not surplus during peak seasons; impossible to move labor to the industrial sector without lowering agricultural output from the beginning of the economic development
Harry Oshima (1990) draws on the experiences of Japan, Taiwan, South Korea, and Malaysia to conclude that labor cannot be redeployed to the cities without reducing rice production unless irrigation and other steps are taken to facilitate multiple cropping
Chapter 4 49
Chapter 4
50
Chapter 4
51
Measures:
Diversify and intensify agricultural production by: new varieties, fertilizer, pesticide, machines and tools increase farm income. Invest in infrastructure: irrigation, transportation, education, electrification. Improve production and marketing organization (cooperatives, financial organization, extension services).
Chapter 4
52
Categories of agricultural products increase Agri. production scale expands Demand for input of agricultural production increases Agricultural products are increasingly processed
Chapter 4
53
Chapter 4
54
Measures:
Diversify agricultural production. Large scale agricultural production. Develop food processing industries jobs. Develop manufacturing of agricultural tools, fertilizer, pesticide. New agricultural-industrial business forms: largescale capitalist farms, corporations...
Chapter 4
55
Labor migration to the urban. Demand for labor > Supply of labor real wage increases
Chapter 4
56
Real wages rise. Dramatic expansion of industries: export increases. Expansion of the tertiary sector. Shortage of labor in the economy
Chapter 4
57
Measures
Replace labor by technology (e.g., biotechnology in agriculture) Development of industrial production: exportoriented; K-intensive
Chapter 4
58
Outcomes:
Production efficiency and competitiveness of industries are high. Demand of labor gradually decreases. Industrial and agricultural output increase. The highest level of development.
Chapter 4
59
Start by keeping labor in the agricultural sector but need to create jobs during off-peak seasons. Employ labor in labor-intensive industries raise income market for industrial and service products. When labor becomes scarce real wages rise technological application higher labor productivity. Inequality in income distribution is minimized.
Chapter 4
60