Balanced Growth And Structural Chang

There are two important stylized facts about the empirical rule of the process of modern economic growth:one is the balanced growth of the gross economy; the other is the significant industrial structure change in the process of growth. The former is summed up as "Kaldor facts", which shows that per capita output, return on capital, capital-output ratio, and the share of material capital and labor in national income remain stable over the long term. The latter is summarized as "Kuznets facts", showing that the distribution of factors of production among the different industries a significant change in the course of economic growth, while consumers'spending share among different industries will also change with the growth of national income. In the traditional neoclassical growth model, the existence of Balanced Growth Path (BGP) is inherently consistent with the "Kaldor facts", and the change of industrial structure in the growth process is one of the focuses of development economics.For the actual economic development experience, the aggregate balanced growth is closely linked with the industrial structure change, but in the process of the development of economic theory, there is a tradition that the problems of growth go back to growth, and the problems of development go back to development. "Kaldor facts" and "Kuznets facts" are the focus of traditional economic growth theory and development economics, respectively. The theory of economic growth mainly studies the reasons why the balanced growth can occur and maintain itself, thus abstracting the industrial structure issue. Development economics is mainly from the industrial level to study the problem of structural change. The traditional economic growth theory and development theory have made great progress in their respective fields, but they can not examine the "Kaldor fact" which reflect the aggregate growth experience and the "Kuznets fact" which reflect the change of industrial structure in a unified framework. The emergence of a new multi-sectoral growth model goes beyond the traditional theory of growth and development, to achieve the theoretical integration of the two stylized facts, the balanced growth and structural changes in the study closely.In the first part of this paper, the main theoretical evolution of economic growth theory and development economics are systematically reviewed, and we treat the traditional growth theory and development theory to a certain extent the theory summary of "Kaldor facts" and "Kuznets facts". Based on the above, the relevant theoretical models of theoretical integration are introduced, which are mainly from two aspects:demand-driven and supply-driven. The theoretical model of demand-driven, which emphasizes the influence of Engel's law on industrial structure change, reveals the effect of consumption structure change on the distribution of factors among industries. From the view of modeling, the change of industrial structure in economic growth is explained mainly by incorporating consumers'non-homothetic preference. As consumers have different preferences for different consumer goods, with the increasing consumers'income level, industries with higher income elasticity will grow faster, leading the factors of production to fill into these industries, this kind of mechanism can be called the "income effect". The theoretical model of supply-driven can completely abstract the special hypothesis about preference. The change of industrial structure comes from the change of relative price caused by the difference of supply factors of different industries, this kind of structural change mechanism can be called "relative price effect". From the perspective of demand-driven and supply-driven, this paper cites three representative models in each field to compare and analyze the two theoretical traditions, and discuss the dynamical mechanism behind the change of industrial structure under the gross balanced growth.Although these multisectoral growth models are difficult to achieve due to modeling technical reasons, the strict balanced growth and industrial structure change at the same time, the new theoretical tradition can overcome the shortcomings of the neoclassical growth model of abstracting the industrial structure change, and it has good applicability for the study of the experience of economic growth and structure transformation in the developed countries. For developing countries such as China, the development process has undergone dramatic structural changes and is far from the steady state predicted by the neoclassical growth model. It is difficult to meet the empirical facts described in the "Kaldor Facts". Considering the cause of "Kuznets facts" has a more important significance. This paper examines China's transition experience from two stylized facts and finds that China's capital-output ratio is not long-term stable as described by the "Kaldor Facts", but maintains an upward trend, but the factors income share tend to be stable. China as a developing country, capital accumulation must still play an important role. On the "Kuznets facts" description of the transition experience, China is broadly consistent with the overall point of view, the first industry sector gradually shrinking, while the secondary industry and the tertiary industry is gradually expanding, from the value-added data, the secondary industry sector has already shown a "hump-shaped" growth path, but a characteristic of China's transition is the evolution of the employment structure lagging behind the industrial structure changes. The process of labor migration from the agricultural sector to the non-agricultural sector has been a problem for many decades in China. The reallocation of labor elements in the early decades had strong imprints of government intervention, but the evidence suggests that excessive intervention is often a failure. Distorted incentives on industrial restructuring will have a certain impact, but the transformation of industrial structure is still more based on the role of endogenous forces of the market. On the basis of summarizing the new multi-sector growth model, this paper makes a new theoretical explanation on the endogenous forces of China's industrial structure transformation by means of two theoretical models.The first benchmark model is a two-sector model that includes agricultural and non-agricultural. Considering that the improvement of agricultural labor productivity plays an important role in China's economic transition, we examine the relationship between agricultural labor productivity and the labor migration. When the productivity of agricultural labor is increased, the subsistence consumption of agricultural products will be satisfied, and the consumption will shift to the industrial goods and services of the non-agricultural sectors. After a calibration of the parameters of the benchmark model, we found that with the further increase of labor productivity in the agricultural sector, the proportion of long-term agricultural employment will be close to 24.9%. In an extended model, we use a four-sector general equilibrium model with three consumer goods production sectors (agricultural, manufacturing and services) and an investment goods production sector to try to separate from the "income effect" and the "relative price effect" to analysis the dynamic mechanism of China's industrial structure changes. At last, we find that consumers'non-homothetic preferences for different product is not the main reason for the change of industrial structure in China. At least after 2010, the acceleration of industrial structure changes have little relation with the demand-driven reason. This paper also finds that China's industrialization process has gradually moved towards the turning point, the agricultural sector technological progress accelerated, the employment labor of the agricultural sector can be more quickly transferred to the Non-agricultural sectors, and the traditional industrial sector is no longer the main sector to absorb the transferred labor force, the service sector has gradually become a new goal of transformation and upgrading.