IDEAS home Printed from https://ideas.repec.org/p/bge/wpaper/1444.html

Industrialization without Innovation

Author

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

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

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

    Download full text from publisher

    File URL: https://bw.bse.eu/wp-content/uploads/2024/05/1444-file.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rafael Dix-Carneiro, 2019. "Trade and Informality in the Presence of Labor Market Frictions and Regulations," 2019 Meeting Papers 144, Society for Economic Dynamics.
    2. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    3. Cohen, Wesley M & Levin, Richard C & Mowery, David C, 1987. "Firm Size and R&D Intensity: A Re-examination," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 543-565, June.
    4. Kiminori Matsuyama, 1992. "A Simple Model of Sectoral Adjustment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(2), pages 375-387.
    5. Costinot, Arnaud & Atkin, David & Fukui, Masao, 2021. "Globalization and the Ladder of Development: Pushed to the Top or Held at the Bottom?," CEPR Discussion Papers 16741, C.E.P.R. Discussion Papers.
    6. Kevin M. Murphy & Andrei Shleifer & Robert Vishny, 1989. "Income Distribution, Market Size, and Industrialization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(3), pages 537-564.
    7. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    8. Reenu, 2008. "Role of Economic Reform in the Growth of Indian Economy," Journal of Commerce and Trade, Society for Advanced Management Studies, vol. 3(1), pages 19-22, April.
    9. 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.
    10. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Akos, 2022. "New Evidence on Sectoral Labor Productivity: Implications for Industrialization and Development," CEPR Discussion Papers 17085, C.E.P.R. Discussion Papers.
    11. Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
    12. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 536-598, June.
    13. Margaret S. McMillan & Dani Rodrik & Claudia Sepúlveda, 2017. "Structural Change, Fundamentals, and Growth," World Bank Publications - Books, The World Bank Group, number 26528, April.
    14. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    15. Joan Monras & Javier Vázquez-Grenno & Ferran Elias, 2017. "Understanding the Effects of Legalizing Undocumented Immigrants," RFBerlin Discussion Paper Series 1708, ROCKWOOL Foundation Berlin (RFBerlin).
    16. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    17. Costa, Francisco & Garred, Jason & Pessoa, João Paulo, 2016. "Winners and losers from a commodities-for-manufactures trade boom," Journal of International Economics, Elsevier, vol. 102(C), pages 50-69.
    18. Ferreira, Francisco H. G. & Firpo, Sergio & Messina, Julián, 2017. "Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012," IZA Discussion Papers 10656, Institute for the Study of Labor (IZA).
    19. Jaffe, Adam B, 1988. "Demand and Supply Influences in R&D Intensity and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 431-437, August.
    20. Clement Imbert & Marlon Seror & Yifan Zhang & Yanos Zylberberg, 2022. "Migrants and Firms: Evidence from China," American Economic Review, American Economic Association, vol. 112(6), pages 1885-1914, June.
    21. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    22. Dix-Carneiro, Rafael & Kovak, Brian K., 2019. "Margins of labor market adjustment to trade," Journal of International Economics, Elsevier, vol. 117(C), pages 125-142.
    23. Brian McCaig & Nina Pavcnik, 2013. "Moving out of Agriculture: Structural Change in Vietnam," NBER Working Papers 19616, National Bureau of Economic Research, Inc.
    24. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    25. Grossman, Gene M & Helpman, Elhanan, 1990. "Comparative Advantage and Long-run Growth," American Economic Review, American Economic Association, vol. 80(4), pages 796-815, September.
    26. Helpman, Elhanan, 1993. "Innovation, Imitation, and Intellectual Property Rights," Econometrica, Econometric Society, vol. 61(6), pages 1247-1280, November.
    27. McMillan, Margaret S. & Rodrik, Dani & Sepúlveda, Claudia, 2017. "Structural change, fundamentals, and growth: A framework and case studies," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-89629-214-7 edited by McMillan, Margaret S.; Rodrik, Dani; Sepúlveda, Claudia.
    28. Douglas Gollin & David Lagakos & Michael E. Waugh, 2014. "The Agricultural Productivity Gap," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 939-993.
    29. 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.
    30. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, June.
    31. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    32. Ariel Pakes & Mark Schankerman, 1984. "An Exploration into the Determinants of Research Intensity," NBER Chapters, in: R&D, Patents, and Productivity, pages 209-232, National Bureau of Economic Research, Inc.
    33. Gaaitzen de Vries & Marcel Timmer & Klaas de Vries, 2015. "Structural Transformation in Africa: Static Gains, Dynamic Losses," Journal of Development Studies, Taylor & Francis Journals, vol. 51(6), pages 674-688, June.
    34. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    35. Brian Reinbold & Paulina Restrepo-Echavarria, 2018. "Measuring Labor Share in Developing Countries," The Regional Economist, Federal Reserve Bank of St. Louis, vol. 26(1).
    36. Paula Bustos & Gabriel Garber & Jacopo Ponticelli, 2020. "Capital Accumulation and Structural Transformation [“Capital Deepening and Nonbalanced Economic Growth”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 1037-1094.
    37. Xavier Giroud & Simone Lenzu & Quinn Maingi & Holger Mueller, 2024. "Propagation and Amplification of Local Productivity Spillovers," Econometrica, Econometric Society, vol. 92(5), pages 1589-1619, September.
    38. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    39. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May.
    40. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
    41. Margaret McMillan & Dani Rodrik & Claudia Sepulveda, 2017. "Structural Change, Fundamentals and Growth: A Framework and Case Studies," NBER Working Papers 23378, National Bureau of Economic Research, Inc.
    42. Monras, Joan & Vázquez-Grenno, Javier & Elias, Ferran, 2018. "Understanding the Effects of Granting Work Permits to Undocumented Immigrants," CEPR Discussion Papers 12726, C.E.P.R. Discussion Papers.
    43. 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.
    44. Richard Rogerson & Joseph Kaboski & Francisco Buera, 2015. "Skill-Biased Structural Change and the Skill Premium," 2015 Meeting Papers 895, Society for Economic Dynamics.
    45. Berthold Herrendorf & Todd Schoellman, 2018. "Wages, Human Capital, and Barriers to Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 1-23, April.
    46. David Lagakos & Michael E. Waugh, 2013. "Selection, Agriculture, and Cross-Country Productivity Differences," American Economic Review, American Economic Association, vol. 103(2), pages 948-980, April.
    47. Paula Bustos & Bruno Caprettini & Jacopo Ponticelli, 2016. "Agricultural Productivity and Structural Transformation: Evidence from Brazil," American Economic Review, American Economic Association, vol. 106(6), pages 1320-1365, June.
    48. David Autor & David Dorn & Gordon H. Hanson & Gary Pisano & Pian Shu, 2020. "Foreign Competition and Domestic Innovation: Evidence from US Patents," American Economic Review: Insights, American Economic Association, vol. 2(3), pages 357-374, September.
    49. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
    50. Francisco J Buera & Joseph P Kaboski & Richard Rogerson & Juan I Vizcaino, 2022. "Skill-Biased Structural Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(2), pages 592-625.
    51. Cohen, Wesley M & Klepper, Steven, 1992. "The Anatomy of Industry R&D Intensity Distributions," American Economic Review, American Economic Association, vol. 82(4), pages 773-799, September.
    52. Niklas Engbom & Christian Moser, 2022. "Earnings Inequality and the Minimum Wage: Evidence from Brazil," American Economic Review, American Economic Association, vol. 112(12), pages 3803-3847, December.
    53. repec:oup:qjecon:v:129:y:2014:i:2:p:939-993. is not listed on IDEAS
    54. Gabriel Ulyssea, 2018. "Firms, Informality, and Development: Theory and Evidence from Brazil," American Economic Review, American Economic Association, vol. 108(8), pages 2015-2047, August.
    55. Foster, Andrew D & Rosenzweig, Mark R, 1996. "Technical Change and Human-Capital Returns and Investments: Evidence from the Green Revolution," American Economic Review, American Economic Association, vol. 86(4), pages 931-953, September.
    56. McMillan, Margaret S. & Rodrik, Dani & Sepúlveda, Claudia, 2017. "Structural change, fundamentals, and growth: A framework and case studies: Synopsis," IFPRI synopses 978-0-89629-978-8, International Food Policy Research Institute (IFPRI).
    57. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 5266, London School of Economics and Political Science, LSE Library.
    58. Goldberg,Pinelopi Koujianou & Reed,Tristan, 2020. "Income Distribution, International Integration and Sustained Poverty Reduction," Policy Research Working Paper Series 9342, The World Bank.
    59. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    60. Elhanan Helpman & Oleg Itskhoki & Marc-Andreas Muendler & Stephen J. Redding, 2017. "Trade and Inequality: From Theory to Estimation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(1), pages 357-405.
    61. repec:fth:stanho:e-92-3 is not listed on IDEAS
    62. Rafael Dix-Carneiro & Pinelopi K. Goldberg & Costas Meghir & Gabriel Ulyssea, 2021. "Trade and Domestic Distortions: the Case of Informality," NBER Working Papers 28391, National Bureau of Economic Research, Inc.
    63. Wesley M. Cohen & Richard C. Levin & David C. Mowery, 1987. "Firm Size and R&D Intensity: A Re-Examination," NBER Working Papers 2205, National Bureau of Economic Research, Inc.
    64. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    65. Rafael Dix-Carneiro, 2019. "Trade and Informality in the Presence of Labor Market Frictions and Regulations," 2019 Meeting Papers 144, Society for Economic Dynamics.
    66. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Clement Imbert & Marlon Seror & Yifan Zhang & Yanos Zylberberg, 2022. "Migrants and Firms: Evidence from China," American Economic Review, American Economic Association, vol. 112(6), pages 1885-1914, June.
    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. Rafael Araujo & Vitor Possebom, 2025. "Potato Potahto in the FAO-GAEZ Productivity Measures? Nonclassical Measurement Error with Multiple Proxies," Papers 2502.12141, arXiv.org, revised Nov 2025.
    5. Britz, Wolfgang & Roson, Roberto & Sartori, Martina, 2019. "SSP long run scenarios for European NUTS2 regions," Conference papers 333114, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Tetyana Surovtseva & Libertad González, 2020. "Do More Tourists Promote Local Employment?," Working Papers 1208, Barcelona School of Economics.
    7. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paula Bustos & Juan Manuel Castro Vincenzi & Joan Monras & Jacopo Ponticelli, 2019. "Structural Transformation, Industrial Specialization, and Endogenous Growth," Working Papers wp2019_1906, CEMFI.
    2. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941, Elsevier.
    3. Christoph Albert & Paula Bustos & Jacopo Ponticelli, 2024. "The effects of climate change on labor and capital reallocation," Economics Working Papers 1887, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Chu, Angus C. & Furukawa, Yuichi & Peretto, Pietro & Xu, Rongxin, 2024. "Agricultural trade and industrial development," MPRA Paper 122630, University Library of Munich, Germany.
    5. Christoph Albert & Paula Bustos & Jacopo Ponticelli, 2021. "The Effects of Climate Change on Labor and Capital Reallocation," NBER Working Papers 28995, National Bureau of Economic Research, Inc.
    6. Chen, Chaoran, 2020. "Technology adoption, capital deepening, and international productivity differences," Journal of Development Economics, Elsevier, vol. 143(C).
    7. Pavel Chakraborty & Rahul Singh & Vidhya Soundararajan, 2024. "Import Competition, Formalization, and the Role of Contract Labor," The World Bank Economic Review, World Bank, vol. 38(4), pages 741-771.
    8. Tohari, Achmad & Parsons, Christopher & Rammohan, Anu, 2021. "Capital Fundamentalism and Structural Transformation," IZA Discussion Papers 14444, Institute of Labor Economics (IZA).
    9. Gangopadhyay, Kausik & Mondal, Debasis, 2021. "Productivity, relative sectoral prices, and total factor productivity: Theory and evidence," Economic Modelling, Elsevier, vol. 100(C).
    10. Ye, Longfeng & Robertson, Peter E., 2019. "Hitting the Great Wall: Structural change and China's growth slowdown," China Economic Review, Elsevier, vol. 56(C), pages 1-1.
    11. Dorinet, Elizavetta & Jouvet, Pierre-André & Wolfersberger, Julien, 2021. "Is the agricultural sector cursed too? Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 140(C).
    12. Chagas, Lucas Squarize & Sant’Anna, Vinicios P., 2024. "International trade and wage inequality: Evidence from Brazil," International Economics, Elsevier, vol. 180(C).
    13. Manuel Fern√°ndez & Gabriela Serrano, 2022. "New Perspectives on Inequality in Latin America," Documentos CEDE 20295, Universidad de los Andes, Facultad de Economía, CEDE.
    14. Dorinet, Elizavetta & Jouvet, Pierre-André & Wolfersberger, Julien, 2021. "Is the agricultural sector cursed too? Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 140(C).
    15. Blanco, Cesar & Raurich, Xavier, 2022. "Agricultural composition and labor productivity," Journal of Development Economics, Elsevier, vol. 158(C).
    16. Chu, Angus C. & Peretto, Pietro F. & Wang, Xilin, 2022. "Agricultural revolution and industrialization," Journal of Development Economics, Elsevier, vol. 158(C).
    17. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
    18. Barker, Tom & Üngör, Murat, 2019. "Vietnam: The next asian Tiger?," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 96-118.
    19. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, June.
    20. Apoorv Gupta & Jacopo Ponticelli & Andrea Tesei, 2020. "Language Barriers, Technology Adoption and Productivity: Evidence from Agriculture in India," NBER Working Papers 27192, National Bureau of Economic Research, Inc.

    More about this item

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:1444. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bruno Guallar (email available below). General contact details of provider: https://edirc.repec.org/data/bargses.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.