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SPRINGER BRIEFS IN ECONOMICS KOBE UNIVERSITY SOCIAL SCIENCE RESEARCH SERIES Tomoko Kinugasa Linhui Yu Qiang Chen Zhixuan Feng Economic Growth and Transition of Industrial Structure in East Asia SpringerBriefs in Economics Kobe University Social Science Research Series Series editor Professor Takashi Yanagawa, Kobe University, Kobe, Japan Editorial Board Members Professor Fumio Sensui, Kobe University, Kobe, Japan Professor Takehisa Kajiwara, Kobe University, Kobe, Japan Professor Nobuaki Matsunaga, Kobe University, Kobe, Japan Professor Nobuyoshi Yamori, Kobe University, Kobe, Japan The Kobe University Social Science Research Series has been established as a subseries of the SpringerBrief in Economics Series, but in fact this exciting interdisciplinary collection encompasses scholarly research not only in the economicsbutalsoinlaw,politicalscience,businessandmanagement,accounting, international relations, and other subdisciplines within the social sciences. As a national university with a special strength in the social sciences, Kobe University actively promotes interdisciplinary research. This series is not limited only to research emerging from Kobe University’s faculties of social sciences but also welcomescross-disciplinaryresearchthatintegratesstudiesintheartsandsciences. KobeUniversity,foundedin1902,isthesecondoldestnationalhighereducation institution for commerce in Japan and is now a preeminent institution for social science research and education in the country. Currently, the social sciences section includes four faculties—Law, Economics, Business Administration, and International Cooperation Studies—and the Research Institute for Economics and BusinessAdministration(RIEB).Therearesome230-plus researchers whobelong tothese faculties andconduct jointresearch through theCenter for Social Systems Innovation and the Organization for Advanced and Integrated Research, Kobe University. Thisbookseriescomprisesacademicworksbyresearchersinthesocialsciences at Kobe University as well as their collaborators at affiliated institutions, Kobe University alumni and their colleagues, and renowned scholars from around the world who have worked with academic staff at Kobe University. Although traditionally the research of Japanese scholars has been publicized mainly in the Japanese language, Kobe University strives to promote publication and dissemi- nation of works in English in order to further contribute to the global academic community. More information about this series at http://www.springer.com/series/15423 Tomoko Kinugasa Linhui Yu (cid:129) Qiang Chen Zhixuan Feng (cid:129) Economic Growth and Transition of Industrial Structure in East Asia 123 TomokoKinugasa QiangChen Graduate Schoolof Economics Schoolof Economics Kobe University Shandong University Kobe,Hyōgo,Japan Jinan,Shandong,China LinhuiYu Zhixuan Feng Schoolof Economics Schoolof Economics ZhejiangUniversity Nankai University Hangzhou, China Tianjin, China ISSN 2191-5504 ISSN 2191-5512 (electronic) SpringerBriefs inEconomics ISSN 2520-1697 ISSN 2520-1700 (electronic) Kobe University Social Science Research Series ISBN978-981-13-2867-1 ISBN978-981-13-2868-8 (eBook) https://doi.org/10.1007/978-981-13-2868-8 LibraryofCongressControlNumber:2018957670 ©TheAuthor(s),underexclusivelicensetoSpringerNatureSingaporePteLtd.2018 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfrom therelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. The publisher, the authors, and the editorsare safeto assume that the adviceand informationin this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authorsortheeditorsgiveawarranty,expressorimplied,withrespecttothematerialcontainedhereinor for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictionalclaimsinpublishedmapsandinstitutionalaffiliations. ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSingaporePteLtd. Theregisteredcompanyaddressis:152BeachRoad,#21-01/04GatewayEast,Singapore189721, Singapore Preface Many East Asian countries have experienced dramatic economic growth since the WorldWarII, anda tremendous amount ofchange has since been observed inthe industrial structure. East Asia has seen remarkable economic growth, which has been dubbed as the “East Asian miracle” by the World Bank. The dramatic eco- nomic growth could be related to remarkable industrialization. Before the World WarII,mostoftheglobalpopulationwasengagedinagriculture.Inthedual-sector models proposed by Lewis (1954) and Ranis and Fei (1961), agriculture is the primary industry in the early stage of economic development. Economies develop furtherwhenthelaborforcemovesfromanagrariansectortoamanufacturingone. As Asian countries developed, manufacturing became the main industry, and soon afterward, the overall share of service industries in the economy increased. At present, there are many developed industries such as the high-tech and IT industries. A notable point is that rapid demographic transition was experienced in East Asiancountriesinthelatterhalfofthe20thcentury.Beforethistransitionoccurred, both fertility and mortality rates were high. As countries developed, mortality, particularlyinfantmortality,begantodeclinerapidly.Thiswasfollowedbyarapid decline in fertility as well. During the demographic transition, the proportion of working-age individuals in the population increased drastically. As per the demo- graphic dividend reported by Bloom and Williamson (1998), this favorable demographic situation, with its higher share of the working-age population and fewerindividualsbelongingtothedependentpopulation,contributedtoremarkable economic growth in Asia. Moreover,itiswidelyconsideredthatglobalizationhassubstantiallycontributed to economic growth in East Asia. Numerous globalization trends have been noted. Inparticular,theGeneralAgreementonTariffsandTrade(GATT)wasestablished in1947toliberalizeworldwidetrade.However,theGATTceasedtoexistafterthe World Trade Organization (WTO) was established in 1995. This has led to the further promotion of trade liberalization and regional economic integration on a global scale. In Southeast Asia, Association of Southeast Asian Nations (ASEAN) was established in 1967, and free trade was promoted among the member v vi Preface countries. Many kinds offree trade agreements (FTAs) and economic partnership agreements(EPAs)havebeenacknowledged,andinternationaltradehasexpanded dramatically. Theabovementionedchangesarelargelyinter-related,andthereisfurtherscope forresearchinthesedomains.Thisbooktriestoexplorethenewfrontierofresearch ineconomicgrowthandindustrialreconstructing.First,thedemographiceffectson trade have not been analyzed in depth in any previous research; Chap. 1 tries to explore these effects. The research presented in Chap. 1 elucidates the effects of demographic change on trade openness and trade balance. Second, as a country develops and undergoes industrialization, remarkable urbanization is observed. Large cities experience economies and diseconomies of agglomeration. Chapter 2 presents the first research that discusses the agglomeration economies and disec- onomies between firms and workers and provides empirical evidence for the misallocation of agglomeration economies and diseconomies in China. Third, economic growth and industrial construction are related to historical events. Just considering the present situation would not suffice, and it is important to discuss history in the long run. Before the era of industrialization, agriculture and stock- breedingweretheprimaryindustries,andtherewerefrequentconflictsbetweenthe nomadicandagriculturalpeople.Chapter3focusesonthedynasticcyclesobserved in China as well as countries near China and investigates the determinants of conquests by nomadic people. An interesting finding was that an older nomadic regime was more likely to be conquered by a younger nomadic regime. This research could provide a basic rationale behind the rise and fall of national power. Fourth, characteristics of exchange, particularly in the context of international exchange, have not been sufficiently analyzed in previous studies but appear to be quite important during the transition era characterized by remarkable economic growthanddramaticchangeintheindustrialstructure;Chap.4triestoexplorethis issue. In Chap. 4, critiques of Emmanuel’s unequal exchange theory are discussed based on the data of profit in the world. Thecontentsofthisbookaresummarizedasfollows:Chap.1,writtenbyYukio Fukumotoand Tomoko Kinugasa, focusesourattention on trade anddemographic change. In this chapter, using 8 panel data of APEC economies available for the period between 1951 and 2010, the authors empirically investigate whether trade openness and trade balance to GDP ratio are influenced by age structure. The authors suggest that age structure influences trade openness because education, nursing care, and medical services are mostly non-tradable, and the share of con- sumptionfornon-tradablegoodsislikelytobehighinthedependentage.Theyalso suggest that age structure influences trade balance because trade balance is a part ofthecurrentaccountbalance.Furthermore,previousstudiesreporttheinfluenceof agestructureonthecurrentaccountbalance.Theempiricalresultsdescribedherein suggest that the share of working-age population (dependency ratio) has a signif- icantlypositive(negative)effectontradeopennessandtradebalancetoGDPratio. In many APEC economies, the share of working-age population is increasing; however,thespeedatwhichthisincreaseisoccurringvariesamongtheeconomies. Preface vii Hence, Fukumoto and Kinugasa conclude that age structure has contributed to increases in trade openness and caused trade imbalances in APEC economies. Chapter2isauthoredbyHongzhongFanandLinhuiYu.Inthischapter,through regression analysis of survey data collected from peasant workers in China, the authorsreveal thatnominalwagesandliving costs ofthese workers areessentially identical across cities of different sizes. This finding suggests that in developing countries with conspicuous and sustained employment pressures like China, the bargainingpoweroflow-skilledworkersaresoweakthattheyhavenoleveragein transferringthehighcostsoflivinginlargecitiestotheiremployersbydemanding better nominal wages. As a result, firms in large cities enjoy most of the benefits afforded by agglomeration at disproportionately reduced costs. In contrast, low-skilled workers bear the costs of agglomeration without earning an equitable levelofbenefitsfromlivinginlargecities.Inthiscase,themarketmechanismthat normally operates to limit city size growth evidently fails to work, which unavoidably promotes the overexpansion of megacities. Chapter 3 is written by Qiang Chen. This chapter is about dynastic cycles and nomadic conquests. Conflict between nomadic and agricultural people has been a recurringphenomenonthroughoutworldhistory.Arecentstudyfindsthatdynastic cycles are an important determinant of nomadic conquests in the context of Sino-nomadic conflict, where an aging Chinese dynasty was more likely to be conquered. This paper extends this result in two dimensions using a sample of nomads in or near China and a sample from world history. The effects of dynastic cyclesonnomadicconquestsremainsignificantinamuchbroadercontext.Overall, thedynasticcycleappearstobeageneralforceshapingworldhistorythathasbeen hitherto underappreciated. Chapter 4 is written by Zhixuan Feng. This chapter reviews the critiques on Emmanuel’sunequalexchangetheoryandfindsthatacrucialconcept,international value, has been neglect. Considering international value, there is no relationship between the formation of international production price that is the foundation of unequalexchangeandtheperfectmobilityofcapitalamongcountries.Anempirical estimation of equalization of profit rate based on the framework of regulation capital is used to certify this viewpoint. By introducing international value, the unequal exchange theory can survive from the critique focusing on the reality of international profit rate equalization. However, the international concept also implies that unequal exchange is not a straight result of the difference of domestic income distribution between countries, but a consequence of the international division of labor. The author also examines the existence of unequal exchange by calculating the gap between international production price and international value, i.e., the volume of transferred value of 40 countries, and finds that unequal exchange does exist and is significant enough to affect the development of one country. This book is highly recommended for readers who would like to obtain a fresh perspectiveabouteconomicdevelopmentintermsofindustrialstructure.Themain partofthisbookisbased ontheAnnualConferencebyFourUniversities ofJapan and China: Economic Growth and Industrial Restructuring of East Asia held on viii Preface December 9, 2016, and hosted by the School of Economics, Zhejiang University. We are grateful to Profs. Taiji Hagiwara, Yun Zhang, Guangjie Ning, Chicheng Ma, Takashi Yanagawa, and participants of the conference. Kobe, Japan Tomoko Kinugasa Hangzhou, China Linhui Yu Jinan, China Qiang Chen Tianjin, China Zhixuan Feng References BloomD,WilliamsonJ(1998)DemographictransitionsandeconomicmiraclesinemergingAsia. WorldBankEconRev12:419–455 LewisAW(1954)Economicdevelopmentwithunlimitedsuppliesoflabor,manchesterschoolof economicsandsocialstudies22:139–191 RanisG,FeiJ(1961)Atheoryofeconomicdevelopment.AmEconRev51:533–565 Contents 1 Does Demographic Change Influence International Trade?: An Empirical Study on APEC Economies . . . . . . . . . . . . . . . . . . . . 1 Yukio Fukumoto and Tomoko Kinugasa 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Literature Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.3 Model and Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.4 Estimation Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.5 Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2 Misallocation of Agglomeration Economies and Diseconomies: Evidence from China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Hongzhong Fan and Linhui Yu 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 2.2 Measuring Misallocation of Agglomeration Economies and Diseconomies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.2.1 Living Costs and City Sizes. . . . . . . . . . . . . . . . . . . . . . . 27 2.2.2 Nominal Wages and Decent Living Costs . . . . . . . . . . . . . 28 2.2.3 City Amenities, Workers’ Bargaining Powers over Wages and Misallocation . . . . . . . . . . . . . . . . . . . . . 29 2.2.4 Nominal Wages and Living Costs Under Employment Pressure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.2.5 Pressure of Migration and Firms’ Profits in Large or Small Cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.2.6 Complete Misallocation of Agglomeration Economies and Diseconomies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2.2.7 No Misallocation of Agglomeration Economies and Diseconomies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2.2.8 Measuring Degree of Misallocation of Agglomeration Economics and Diseconomies. . . . . . . . . . . . . . . . . . . . . . 33 ix

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Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.