Economic Growth and Transition of Industrial Structure in East Asia

106 Pages·2018·1.848 MB·English

by  Tomoko Kinugasa, Linhui Yu, Qiang Chen, Zhixuan Feng

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