Wang, PingXie, Danyang2020-09-132020-09-132001http://hdl.handle.net/1803/15697This paper constructs an integrated framework to disentangle the underlying economic mechanism of industrial transformation. We consider three essential elements for the analysis: skill requirements, industry wide spillovers and degrees of consumption subsistence. We find that human and nonhuman resources, production factor matching and industrial coordination are all important for activating a modern industry. In the process of industrial transformation, job destruction may exceed job creation, and income distribution may get worse immediately following the activation of a modern industry. An array of policy prescriptions for advancing a poor country are provided.en-USJEL Classification Number: D24, O14, D33.Working Paper