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How Structural Change Differs, and Why it Matters (for Economic Growth)

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  • Keld Laursen

Abstract

Several types of theoretical literature on the topic of trade, growth and specialisation, including neoclassical approaches, post-Keynesian literature and some models in evolutionary economics, have shown that it is possible enjoy higher rates of economic growth, given the presence of certain sectors in the economy, being it high-tech or fast-growing sectors. This paper investigates these propositions empirically. Basically the idea is to conduct a constant market share (CMS) analysis, and afterwards include the obtained effects in regression models, using panel data techniques in explaining aggregate economic growth. The results display that the fixed effects model is the most appropriate technique, and that using this tool, the initial level of income (the catch up variable) is significant and has a negative sign as expected. The investment (growth of the capital stock) variable is also significant, while the growth adaptation effect (measuring whether the country in question has actively (more than the average country) moved into slow or fast growing sectors) is the only significant variable (positive sign) of the CMS effects. Hence, it is concluded that a certain dynamism in terms of structural change is required by countries in order to achieve high levels of economic growth at the macro level. The final part of the paper deals with the question of whether the fast-growing sectors (as measured in the CMS analysis) are high-tech or not. Based on a comparison between the OECD growth vector from the CMS analysis, on the one hand, and R&D intensities in the 22 sectors (for the 1970s and for the 1980s), on the other, it is concluded that the fast-growing sectors are in general also high-tech sectors.

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File URL: http://www3.druid.dk/wp/19980025.pdf
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Bibliographic Info

Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 98-25.

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Date of creation: 1998
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Handle: RePEc:aal:abbswp:98-25

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Web page: http://www.druid.dk/

Related research

Keywords: trade specialisation; economic growth; constant market share analysis; panel data;

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References

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  1. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
  3. Dalum, Bent & Laursen, Keld & Verspagen, Bart, 1999. "Does Specialization Matter for Growth?," Industrial and Corporate Change, Oxford University Press, vol. 8(2), pages 267-88, June.
  4. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-48, November.
  5. Bent Dalum & Keld Laursen & Gert Villumsen, 1998. "Structural Change in OECD Export Specialisation Patterns: de-specialisation and 'stickiness'," International Review of Applied Economics, Taylor & Francis Journals, vol. 12(3), pages 423-443.
  6. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
  7. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-71, September.
  8. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
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Cited by:
  1. Julia Wörz, 1970. "Skill Intensity in Foreign Trade and Economic Growth," wiiw Working Papers 25, The Vienna Institute for International Economic Studies, wiiw.
  2. Julia Woerz, 2004. "Skill Intensity in Foreign Trade and Economic Growth," Tinbergen Institute Discussion Papers 04-059/2, Tinbergen Institute.
  3. Julia Woerz, 2004. "Skill Intensity in Foreign Trade and Economic Growth," Tinbergen Institute Discussion Papers 04-059/2, Tinbergen Institute.
  4. Julia Wörz, 2005. "Skill Intensity in Foreign Trade and Economic Growth," Empirica, Springer, vol. 32(1), pages 117-144, 03.
  5. Dora Borbély, 2004. "Competition among Cohesion and Accession Countries: Comparative Analysis of Specialization Within the EU Market," EIIW Discussion paper disbei122, Universitätsbibliothek Wuppertal, University Library.

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