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Rural–urban interdependence, structural change, and development

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  • Nishida, Keigo

Abstract

This paper presents a model of development that explicitly incorporates the interaction between rural agriculture and urban non-agriculture explored by Murata (2002). The increase of capital stock leads to capital intensive agriculture and the reallocation of labor from agriculture to non-agriculture. People who migrate to urban areas create new intermediate goods and enhance non-agricultural productivity, which, in turn, causes capital accumulation and capital intensive agriculture. This mechanism causes a poverty trap, stagnation, and unbounded growth.

Suggested Citation

  • Nishida, Keigo, 2016. "Rural–urban interdependence, structural change, and development," Economics Letters, Elsevier, vol. 142(C), pages 83-86.
    • Handle: RePEc:eee:ecolet:v:142:y:2016:i:c:p:83-86
    DOI: 10.1016/j.econlet.2016.03.013
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    References listed on IDEAS

    as
    1. Murata, Yasusada, 2002. "Rural-urban interdependence and industrialization," Journal of Development Economics, Elsevier, vol. 68(1), pages 1-34, June.
    2. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    3. Eswaran, Mukesh & Kotwal, Ashok, 1993. "A theory of real wage growth in LDCs," Journal of Development Economics, Elsevier, vol. 42(2), pages 243-269, December.
    4. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 2001. "Beyond Balanced Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(4), pages 869-882.
    5. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    6. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, June.
    7. Fabio Cerina & Francesco Mureddu, 2013. "Structural Change and Growth in a NEG Model," Review of Development Economics, Wiley Blackwell, vol. 17(2), pages 182-200, May.
    8. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
    9. Murata, Yasusada, 2008. "Engel's law, Petty's law, and agglomeration," Journal of Development Economics, Elsevier, vol. 87(1), pages 161-177, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Structural change; Labor migration; Poverty trap; Sustained growth;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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