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The structural transformation and aggregate productivity in Portugal

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  • Margarida Duarte

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  • Diego Restuccia

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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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Suggested Citation

  • Margarida Duarte & Diego Restuccia, 2007. "The structural transformation and aggregate productivity in Portugal," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(1), pages 23-46, April.
  • Handle: RePEc:spr:portec:v:6:y:2007:i:1:p:23-46 DOI: 10.1007/s10258-006-0016-3
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    References listed on IDEAS

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    4. Margarida Duarte & Diego Restuccia, 2010. "The Role of the Structural Transformation in Aggregate Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 129-173.
    5. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
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    Cited by:

    1. Breinlich, Holger & Cuñat, Alejandro, 2013. "Geography, non-homotheticity, and industrialization: A quantitative analysis," Journal of Development Economics, Elsevier, pages 133-153.
    2. 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.
    3. Diego Restuccia, 2008. "The Latin American Development Problem," Working Papers tecipa-318, University of Toronto, Department of Economics.
    4. Alessio Moro, 2015. "Structural Change, Growth, and Volatility," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 259-294, July.
    5. Pedrosa Silva Duarte Maria Adelaide & Nunes Simões Marta Cristina, 2014. "Tertiarization and Human Capital: Do They Matter for Growth? Insights From Portugal," Scientific Annals of Economics and Business, De Gruyter Open, vol. 61(1), pages 1-24, July.
    6. 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.
    7. Marta S. S. Ramos & Marta C. N. Simoes, 2011. "Growth and the Services Sector: The Portugal Case," Book Chapters, Institute of Economic Sciences.
    8. Margarida Duarte & Diego Restuccia, 2010. "The Role of the Structural Transformation in Aggregate Productivity," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 129-173.
    9. Diego Restuccia, 2013. "The Latin American Development Problem: An Interpretation," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Spring 20), pages 69-108, January.
    10. Dias, Daniel A. & Robalo Marques, Carlos & Richmond, Christine, 2016. "Misallocation and productivity in the lead up to the Eurozone crisis," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 46-70.
    11. Üngör, Murat, 2013. "De-agriculturalization as a result of productivity growth in agriculture," Economics Letters, Elsevier, vol. 119(2), pages 141-145.
    12. Gaspar, João & Pina, Gilson & Simões, Marta, 2014. "Agriculture in Portugal: linkages with industry and services," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, pages 437-471.
    13. repec:fip:fedreq:y:2011:i:3q:p:329-357:n:vol.97no.3 is not listed on IDEAS
    14. 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, Faculty of Economics, University of Coimbra.
    15. 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.
    16. Ferreira Pedro Cavalcanti & da Silva Leonardo Fonseca, 2015. "Structural transformation and productivity in Latin America," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 603-630, July.
    17. Bah, El-hadj M., 2007. "Structural Transformation in Developed and Developing Countries," MPRA Paper 10655, University Library of Munich, Germany, revised 19 Sep 2008.
    18. Lars Calmfors & Giancarlo Corsetti & John Hassler & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Ákos Valentinyi & Xavier Vives, 2012. "Chapter 5: The Hungarian Crisis," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 115-130, February.

    More about this item

    Keywords

    O1; O4; Structural transformation; Sectoral productivity;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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