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Structural Problems and External Imbalance
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TitleStructural Problems and External Imbalance  
AuthorYuan Zhigang;Zhang Ruoxue  
OrganizationSchool of Economics, Fudan University;The People's Bank of China, Shanghai Head Office,  
Key WordsTwo-way Transfer;Structural Problems;External Imbalance  
AbstractThe most important impetus of China’s economic growth includes industry transfer and labor force mobility. After the reform and opening up of China, many industries especially manufacturing transfer from advanced countries to China. At the same time, more and more rural labor force moves into the cities and enter non-agricultural industries. In this process, China’s comparative advantage has been fully displayed. During the two-way transfer, China is confronted with severe current account imbalance because of structural problems, which include poor technology innovation capability, low efficiency of financial market, and investment barriers. According to the endogenous technology R&D model, the present paper constructs a formal analytical framework to investigate the mechanism of these issues. This paper rationalizes current account imbalance as an equilibrium outcome when different regions of the world differ in their economic structure.  
Serial NumberWP7 
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