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The Structural Transformation and Aggregate Productivity in Portugal

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  • Margarida Duarte
  • Diego Restuccia

Abstract

We document the substantial process of structural transformation -the reallocation of labor between agriculture, manufacturing, and services- and aggregate productivity growth undergone by Portugal between 1956 and 1995. In this paper, we assess the quantitative role of sectoral productivity in accounting for these processes. We calibrate a model of the structural transformation to data for the United States and use the model to gain insight into the factors driving the structural transformation and aggregate productivity growth in Portugal. The model implies that Portugal features low and roughly constant relative productivity in agriculture and services (around 22 percent) and a modest but growing relative productivity in manufacturing (from 44 to 110 percent). We find that productivity growth in manufacturing accounts for most of the reduction of the aggregate productivity gap with the United States and that further substantial improvements in relative aggregate productivity can only be accomplished via improvements in the relative productivity of the service sector.

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File URL: http://www.economics.utoronto.ca/public/workingPapers/tecipa-261-1.pdf
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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-261.

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Length: 38 pages
Date of creation: 13 Nov 2006
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-261

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Keywords: productivity; structural transformation; relative sectoral productivity.;

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References

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  1. Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 545-61, July.
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  5. Richard Rogerson, 2007. "Structural Transformation and the Deterioration of European Labor Market Outcomes," NBER Working Papers 12889, National Bureau of Economic Research, Inc.
  6. Margarida Duarte & Diego Restuccia, 2010. "The Role of the Structural Transformation in Aggregate Productivity," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 129-173, February.
  7. Harold L. Cole & Lee E. Ohanian, 1999. "The Great Depression in the United States from a neoclassical perspective," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-24.
  8. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," Department of Economics Working Papers 2002-09, Department of Economics, Williams College.
  9. Tiago Cavalcanti, 2007. "Business cycle and level accounting: the case of Portugal," Portuguese Economic Journal, Springer, vol. 6(1), pages 47-64, April.
  10. Edward C. Prescott, 2004. "Why Do Americans Work So Much More Than Europeans?," Levine's Bibliography 122247000000000413, UCLA Department of Economics.
  11. Kongsamut, Piyabha & Rebelo, Sérgio & Xie, Danyang, 1997. "Beyond Balanced Growth," CEPR Discussion Papers 1693, C.E.P.R. Discussion Papers.
  12. Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2007. "Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Working Papers e07-3, Virginia Polytechnic Institute and State University, Department of Economics.
  13. Andre C. Silva, 2012. "Taxes and Labor Supply: Portugal, Europe, and the United States," FEUNL Working Paper Series wp561, Universidade Nova de Lisboa, Faculdade de Economia.
  14. Richard Rogerson, 2006. "Structural Transformation and the Labor Market," 2006 Meeting Papers 256, Society for Economic Dynamics.
  15. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-52, May.
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Citations

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Cited by:
  1. Diego Restuccia & Margarida Duarte, 2011. "Relative Prices and Sectoral Productivity," 2011 Meeting Papers 1345, Society for Economic Dynamics.
  2. Jørn Rattsø & Hildegunn E. Stokke, 2009. "Trade barriers to growth in South Africa: Endogenous investment-productivity-trade interaction," DEGIT Conference Papers c014_010, DEGIT, Dynamics, Economic Growth, and International Trade.
  3. repec:fip:fedreq:y:2011:i:3q:p:329-357:n:vol.97no.3 is not listed on IDEAS
  4. Diego Restuccia, 2008. "The Latin American Development Problem," Working Papers tecipa-318, University of Toronto, Department of Economics.
  5. Marta S. S. Ramos & Marta C. N. Simoes, 2011. "Growth and the Services Sector: The Portugal Case," Book Chapters, Institute of Economic Sciences.
  6. Margarida Duarte & Diego Restuccia, 2007. "The Role of the Structural Transformation in Aggregate Productivity," Working Papers tecipa-300, University of Toronto, Department of Economics.
  7. Diego Restuccia, 2013. "The Latin American Development Problem: An Interpretation," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  8. Üngör, Murat, 2013. "De-agriculturalization as a result of productivity growth in agriculture," Economics Letters, Elsevier, vol. 119(2), pages 141-145.
  9. Silva, Leonardo Fonseca da & Ferreira, Pedro Cavalcanti, 2011. "Structural Transformation and Productivity in Latin America," Economics Working Papers (Ensaios Economicos da EPGE) 724, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  10. Marta C. N. Simões & Adelaide Duarte, 2013. "Human Capital and Growth in a Services Economy: the Case of Portugal," GEMF Working Papers 2013-21, GEMF - Faculdade de Economia, Universidade de Coimbra.
  11. João Gaspar & Gilson Pina & Marta C. N. Simões, 2014. "Agriculture in Portugal: linkages with industry and services," GEMF Working Papers 2014-04, GEMF - Faculdade de Economia, Universidade de Coimbra.
  12. Bah, El-hadj, 2009. "Structural Transformation in Developed and Developing Countries," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 42, Verein für Socialpolitik, Research Committee Development Economics.
  13. Rattsø, Jørn & Stokke, Hildegunn E., 2012. "Trade policy in a growth model with technology gap dynamics and simulations for South Africa," Journal of Economic Dynamics and Control, Elsevier, vol. 36(7), pages 1042-1056.
  14. Murat Üngör, 2009. "De-industrialization of the Riches and the Rise of China," DEGIT Conference Papers c014_040, DEGIT, Dynamics, Economic Growth, and International Trade.

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