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Towards a More Complete Theory of Structural Transformation

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  • Chi Pui Ho

    (The University of Hong Kong)

Abstract

This paper constructs a unified model on how population growth, technological progress and capital deepening induce structural transformation. We solve analytically the closed-form solution for the model to unearth the mechanisms and crucial assumptions underlying how these factors interact and foster structural transformation. When agricultural productivity growth is fast enough to outweigh the relative price effects contributed by non-agricultural productivity growth, population growth and capital deepening, production factors will move out of agriculture. We clarify the condition to sustain growth in asymp- totic growth path. We found empirical validity of the model with sectoral data from the United States in 1970-2020.

Suggested Citation

  • Chi Pui Ho, 2024. "Towards a More Complete Theory of Structural Transformation," Annals of Economics and Finance, Society for AEF, vol. 25(1), pages 289-326, May.
    • Handle: RePEc:cuf:journl:y:2024:v:25:i:1:ho
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    References listed on IDEAS

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    More about this item

    Keywords

    Structural transformation; Sectoral shares; Population growth; Technological progress; Capital deepening; Growth theory;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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