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Industrialization without Innovation

Author

Listed:
  • Paula Bustos
  • Juanma Castro-Vincenzi
  • Joan Monràs
  • Jacopo Ponticelli

Abstract

Labor-saving technologies in agriculture can foster structural transformation by re- leasing workers who find jobs in manufacturing. The traditional view is that factor reallocation towards manufacturing Generates innovation and productivity growth. We document, instead, that regions more exposed to a large and exogenous in- crease in agricultural productivity in Brazil industrialized but experienced lower manufacturing productivity growth. Workers released from agriculture were mostly unskilled and primarily moved to the least skill-intensive manufacturing industries. This paper explores the various Mechanisms that can account for the observed manufacturing productivity decline. Changes in worker composition and lower incentives to innovate within manufacturing play prominent roles.

Suggested Citation

  • Paula Bustos & Juanma Castro-Vincenzi & Joan Monràs & Jacopo Ponticelli, 2024. "Industrialization without Innovation," Working Papers 1444, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1444
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    agricultural productivity; skill-biased technical change; productivity; labor mobility; genetically engineered soy; Brazil;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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