CHINA'S ECONOMIC GROWTH, STRUCTURAL CHANGE AND THE LEWISIAN TURNING POINT

Constructing an open economy Lewisian growth model with three sectors, we analyze the relationship between economic growth and the level of absolute prices. We show that the absolute price level will not increase until the economy reaches the Lewisian turning point. In addition, we show that in an economy like China, where there are strong barriers to the movement of labor to the manufacturing sector and where the ratio of net exports of goods and services to GDP is high, the economy will not reach the turning point until GDP per worker reaches a relatively high level.