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Industrialization without Innovation

Author

Listed:
  • Paula Bustos
  • Juan Manuel Castro-Vincenzi
  • Joan Monras
  • Jacopo Ponticelli

Abstract

The introduction of labor-saving technologies in agriculture can foster structural transformation by releasing workers who find occupation in other sectors. The traditional view is that the reallocation of labor towards manufacturing generates innovation and productivity growth. We conduct an empirical investigation of this structural transformation process in the context of a large and exogenous increase in agricultural productivity in Brazil. We find that workers leaving agriculture were mostly unskilled. Thus, they found employment in the least skill-intensive manufacturing industries. Next, we investigate the effect of this change in comparative advantage within the manufacturing sector on innovation. We use social security data to develop a new measure of the labor input in innovation that is representative at any level of spatial aggregation. We find that regions with faster agricultural productivity growth experienced a reallocation of unskilled workers away from agriculture into the least R&D-intensive manufacturing industries. The expansion of low-R&D industries attracted workers away from innovative occupations in high-R&D industries, slowing down local aggregate manufacturing productivity growth.

Suggested Citation

  • Paula Bustos & Juan Manuel Castro-Vincenzi & Joan Monras & Jacopo Ponticelli, 2019. "Industrialization without Innovation," NBER Working Papers 25871, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25871
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    References listed on IDEAS

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    3. Heitor Pellegrina & Sebastian Sotelo, 2019. "Migration, Specialization and Trade: Evidence from the Brazilian March to the West," 2019 Meeting Papers 863, Society for Economic Dynamics.
    4. André Albuquerque Sant’Anna & Lucas Costa, 2019. "Bailing out environmental liabilities: moral hazard and deforestation in the Brazilian Amazon," Documentos de Trabajo 17435, The Latin American and Caribbean Economic Association (LACEA).

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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