TY - JOUR
T1 - Structural transformation to manufacturing and services
T2 - What role for trade?
AU - Anderson, Kym
AU - Ponnusamy, Sundar
N1 - Publisher Copyright:
© 2019 Asian Development Bank and Asian Development Bank Institute.
PY - 2019
Y1 - 2019
N2 - Understanding how and why economies structurally transform as they grow is crucial for making sound national policy decisions. Typically, analysts who study this issue focus on sectoral shares of gross domestic product and employment. This paper extends those studies to include exports, including exports of services. It also considers mining, in addition to agriculture and manufacturing, and recognizes that some of the products of these four sectors are nontradable. The section on theory presents a general equilibrium model that provides hypotheses about structural change in different types of economies as they grow. These are then tested econometrically with annual data for the period 1991–2014 for a sample of 117 countries. The results point to the futility of adopting protective policies aimed at slowing deagriculturalization and subsequent deindustrialization in terms of sectoral shares, since those trends inevitably will accompany economic growth. Fortuitously, governments now have more efficient and equitable ways of supporting adjustments needed by people who choose or are forced to leave declining industries.
AB - Understanding how and why economies structurally transform as they grow is crucial for making sound national policy decisions. Typically, analysts who study this issue focus on sectoral shares of gross domestic product and employment. This paper extends those studies to include exports, including exports of services. It also considers mining, in addition to agriculture and manufacturing, and recognizes that some of the products of these four sectors are nontradable. The section on theory presents a general equilibrium model that provides hypotheses about structural change in different types of economies as they grow. These are then tested econometrically with annual data for the period 1991–2014 for a sample of 117 countries. The results point to the futility of adopting protective policies aimed at slowing deagriculturalization and subsequent deindustrialization in terms of sectoral shares, since those trends inevitably will accompany economic growth. Fortuitously, governments now have more efficient and equitable ways of supporting adjustments needed by people who choose or are forced to leave declining industries.
KW - Comparative advantage
KW - Declining sectors
KW - Patterns of structural change
KW - Productivity growth
UR - http://www.scopus.com/inward/record.url?scp=85073467723&partnerID=8YFLogxK
U2 - 10.1162/adev_a_00131
DO - 10.1162/adev_a_00131
M3 - Article
SN - 0116-1105
VL - 36
SP - 32
EP - 71
JO - Asian Development Review
JF - Asian Development Review
IS - 2
ER -