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China's industrial revolution: A new perspective

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  • Wen, Yi

Abstract

In “The Industrial Structure of Production: An Outline of a Research Program,” Ronald Coase and Ning Wang (2001) made a plea for a new economic research program that can go beyond the Arrow-Debreu framework and explain China's miraculous rise. They point out that the greatest trouble with the Arrow-Debreu framework lies in its inability to explain production. In this article I will push this insight further to shed new light on why and how production, or mass production in particular, emerged and mushroomed in the 18th–19th century England, the 19th–20th century United States, and 20th-21st century China but not in other parts of the world with similar geo-developmental conditions such as the Netherlands, Mexico, or India. My central thesis is that production or firms emerge in response to market demand, yet the so-called “market” is itself a fundamental public good that must be created by a development state instead of the “invisible hand.” Therefore, the lack of industrialization in any nation seems on the surface due to the lack of mass supply, but is in fact due to the lack of a mass market, which in turn is due to the lack of powerful and strong-willed market creators.

Suggested Citation

  • Wen, Yi, 2021. "China's industrial revolution: A new perspective," China Economic Review, Elsevier, vol. 69(C).
  • Handle: RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000894
    DOI: 10.1016/j.chieco.2021.101671
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    References listed on IDEAS

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    1. Zhang, Xiaobo & Yang, Jin & Reardon, Thomas, 2020. "Mechanization outsourcing clusters and division of labor in Chinese agriculture," IFPRI book chapters, in: An evolving paradigm of agricultural mechanization development: How much can Africa learn from Asia?, chapter 2, pages 71-96, International Food Policy Research Institute (IFPRI).
    2. Allen,Robert C., 2009. "The British Industrial Revolution in Global Perspective," Cambridge Books, Cambridge University Press, number 9780521868273, January.
    3. Justin Yifu Lin, 2013. "Demystifying the Chinese Economy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(3), pages 259-268, September.
    4. Justin Yifu Lin, 2012. "New Structural Economics : A Framework for Rethinking Development and Policy," World Bank Publications - Books, The World Bank Group, number 2232.
    5. Wrigley,E. A., 2010. "Energy and the English Industrial Revolution," Cambridge Books, Cambridge University Press, number 9780521131858, November.
    6. Long, Cheryl & Zhang, Xiaobo, 2011. "Cluster-based industrialization in China: Financing and performance," Journal of International Economics, Elsevier, vol. 84(1), pages 112-123, May.
    7. Lin,Justin Yifu, 2009. "Economic Development and Transition," Cambridge Books, Cambridge University Press, number 9780521735513, November.
    8. Coase Ronald H & Wang Ning, 2011. "The Industrial Structure of Production: A Research Agenda for Innovation in an Entrepreneurial Economy," Entrepreneurship Research Journal, De Gruyter, vol. 1(2), pages 1-13, March.
    9. Lin,Justin Yifu, 2009. "Economic Development and Transition," Cambridge Books, Cambridge University Press, number 9780521514521, November.
    10. Wrigley,E. A., 2010. "Energy and the English Industrial Revolution," Cambridge Books, Cambridge University Press, number 9780521766937, November.
    11. Patrick O'Brien & Trevor Griffiths & Philip Hunt, 1991. "Political components of the industrial revolution: Parliament and the English cotton textile industry, 1660-1774," Economic History Review, Economic History Society, vol. 44(3), pages 395-423, August.
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    Cited by:

    1. Huang, Yongming & Faraz Raza, Syed Muhammad & Usman, Muhammad, 2023. "Asymmetric role of natural resources dependence, industrialization, and foreign direct investment in China’s economic growth," Resources Policy, Elsevier, vol. 85(PB).

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    More about this item

    Keywords

    Industrial revolution; Poverty trap; Chinese economy; Proto-industrialization; Market creation; State capacity; Development state; Industrial policy; New stage theory;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • N60 - Economic History - - Manufacturing and Construction - - - General, International, or Comparative
    • N65 - Economic History - - Manufacturing and Construction - - - Asia including Middle East
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P30 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • P40 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - General
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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