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Deindustrialization and the Social and Economic Sustainability Nexus in Developing Countries: Cross-Country Evidence on Productivity and Employment

In an empirical investigation of the interactions between industrial structure and macro outcomes, an accounting framework was applied to relate changes in sectoral employment and output compositions to changes in overall productivity growth over time. The numerical results were interpreted using a taxonomy describing industrialization and deindustrialization in developing countries. The findings suggest that, in particular, industrial performance correlates with the overall performance of an economy, and therefore is the key sector in explaining the sustainability of different regional patterns in overall productivity and employment growth. That is, negative rates of productivity growth in the industrial sector are strongly associated with negative productivity growth for the economy as a whole, and vice versa. Further, slow industrial growth may lead to low road development, in which productivity growth trades off with employment growth, while high road development is defined as simultaneously expanding employment and overall productivity growth.

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Paper provided by Schwartz Center for Economic Policy Analysis (SCEPA), The New School in its series SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. with number 1998-20.

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Length: 47 pages
Date of creation: May 1998
Date of revision: Mar 1999
Handle: RePEc:epa:cepawp:1998-20
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  1. Rudger Dornbusch & Ilan Goldfajn & Rodrigo O. Vald├ęs, 1995. "Currency Crises and Collapses," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 219-294.
  2. Tibor Scitovsky, 1954. "Two Concepts of External Economies," Journal of Political Economy, University of Chicago Press, vol. 62, pages 143.
  3. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
  4. Horton, Susan & Kanbur, Ravi & Mazumdar, Dipak, 1991. "Labor markets in an era of adjustment : an overview," Policy Research Working Paper Series 694, The World Bank.
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