Bah, El-hadj M. (2007): A Three-Sector Model of Structural Transformation and Economic Development.
This is the latest version of this item.
Download (442kB) | Preview
Differences in total factor productivity (TFP) are the dominant source of the large variation of income across countries. This paper seeks to understand which sectors account for the aggregate TFP gap between rich and poor countries. I propose a new approach for estimating sectoral TFP using panel data on sectoral employment shares and GDP per capita. The approach builds a three-sector model of structural transformation and uses it to infer time paths of sectoral TFP consistent with the reallocation of labor between sectors and GDP per capita growth of a set of developing countries over a 40-year period. I find that relative to the US, developing countries are the least productive in agriculture, followed by services and then manufacturing. The findings are consistent with the evidence from micro data and the approach has the novelty to measure sectoral TFPs over the long term.
|Item Type:||MPRA Paper|
|Original Title:||A Three-Sector Model of Structural Transformation and Economic Development|
|Keywords:||Productivity, Sectoral TFP, Structural Transformation, Eco- nomic growth, Economic Development|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence
E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E10 - General
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology
|Depositing User:||El-hadj M. Bah|
|Date Deposited:||01. Aug 2011 10:11|
|Last Modified:||30. Dec 2015 19:59|
Bah, El-hadj, "Structural Transformation in Developed and Developing Countries," September 2008. The University of Auckland University Working Paper.
Bah, El-hadj and Josef Brada, "Total Factor Productivity Growth and Structural Change in Transition Economies," August 2008.
Beaumol, William, "Macroeconomics of Unbalanced Growth: The anatomy of Urban Crisis," The American Economic Review, June 1967, 57 (3), 415-426.
Brauer, David, "What account for the Decline in Manufacturing Employment?",Economic and budget issue brief, November 2006.
Caselli, Francesco, "Accounting for Cross-Country Income Diferences," in Philippe Aghion and Steven Durlaf, eds., Handbook of Economic Growth, Elsevier 2005.
Cordoba, Juan Carlos and Marla Ripoll, "Endogenous TFP and Cross-Country Income Dierences," December 2005. Rice University Working Paper.
Duarte, Margarida and Diego Restuccia, "The Role of Structural Transformation in Aggregate Productivity," October 2007. University of Toronto Working Paper.
Echevarria, Christina, "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, May 1997, 38 (2), 431-452.
Gollin, Douglas, Stephen L. Parente, and Richard Rogerson, "The Role of Agriculture in Development," American Economic Review: Papers and Proceedings, May 2002, 92 (2), 160-164.
Gollin, Douglas, Stephen L. Parente, and Richard Rogerson, "The Food Problem and the Evolution of International Income Levels,"Journal of Monetary Economics, May 2007, 54 (4), 1230-1255.
Hall, Robert E. and Charles I. Jones, "Why do Some Countries Produce So Much More Output per Worker than Others," The Quaterly Journal of Economics, February 1999, 114 (1), 83-116.
Hayami, Yujiro and Vernon W. Ruttan, Agricultural Development: An International Perspective, Baltimore: John Hopkins, 1985.
Hendricks, Lutz, "How Important is Human Capital for Development? Evidence from Immigrant Earnings," The American Economic Review, March 2002, 92 (1), 198-219.
Herrendorf, Berthold and Akos Valentinyi, "Which Sector Make the Poor Countries So Unproductive," September 2006. Arizona State University working paper.
Hsieh, Chang-Tai and Peter J. Klenow, "Relative Prices and Relative Prosperity," The American Economic Review, June 2007, 97 (3), 562-585.
Klenow, Peter J. and Andres Rodriguez-Clare, "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," in Ben Bernanke and Julio J. Rotemberg, eds., NBER Macroeconomics Annual, MIT Press 1997, pp. 73-103.
Kongsamut, Piyabha, Sergio Rebelo, and Danyang Xie, "Beyond Balanced Growth," Review of Economic Studies, October 2001, 68 (4), 869-882.
Kuznets, Simon, Economic Growth of Nations, Cambridge: Harvard University Press,1971.
Laitner, John, "Structural Change and Economic Growth," Review of Economic Studies, July 2000, 67 (3), 545-561.
Lewis, William W., The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability, Chicago: The University of Chicago Press, 2004.
Mundlank, Yair, The Economic Organization of Agriculture, New York: McGraw-Hill,2001.
Ngai, L. Rachel and Christopher A. Pissarides, "Structural Change in a Multi-Sector Model of Growth," American Economic Review, March 2007, 97 (1), 429-443.
Parente, Stephen L. and Edward C. Prescott, "Barriers to Technology Adoption and Development," Journal of Political Economy, April 1994, 102 (2), 298-321.
Parente, Stephen L. and Edward C. Prescott, Barriers to Riches, Cambridge: MIT Press, 2000.
Prescott, Edward C.,"Needed: A theory of Total Factor Productivity," International Economic Review, August 1998, 39 (3), 525-551.
Restuccia, Diego, Dennis Tao Yang, and Xiadong Zhu, "Agriculture and Aggregate Productivty: A Quantitative Cross-Country Analysis," The Journal of Monetary Economics, Mars 2007, 55 (2), 234-250.
Rogerson, Richard, "Structural Transformation and the Determination of European Labor Market Outcomes," February 2007. NBER Working Paper No 12889.
Sachs, Jerey and Andrew Warner, "Economic Reform and the Process of Global Integration," Brooking Papers on Economic Activity, March 1995, 1995 (1), 1-118.
Wacziarg, Romain and Karen Horn Welch, "Trade Liberalization and Growth: New Evidence," December 2003. NBER Working Paper No. 10152.
Available Versions of this Item
A Three-Sector Model of Structural Transformation and Economic Development. (deposited 20. Sep 2008 05:32)
- A Three-Sector Model of Structural Transformation and Economic Development. (deposited 01. Aug 2011 10:11) [Currently Displayed]