IDEAS home Printed from https://ideas.repec.org/p/fpr/ifprid/1160.html
   My bibliography  Save this paper

Globalization, structural change, and productivity growth:

Author

Listed:
  • McMillan, Margaret
  • Rodrik, Dani

Abstract

Large gaps in labor productivity between the traditional and modern parts of the economy are a fundamental reality of developing societies. In this paper, we document these gaps and emphasize that labor flows from low-productivity activities to high-productivity activities are a key driver of development. Our results show that since 1990 structural change has been growth-reducing in both Africa and Latin America, with the most striking changes taking place in Latin America. The bulk of the difference between these countries’ productivity performance and that of Asia is accounted for by differences in the pattern of structural change—with labor moving from low- to high-productivity sectors in Asia, but in the opposite direction in Latin America and Africa. In our empirical work, we identify three factors that help determine whether—and, if so, the extent to which—structural change contributes to overall productivity growth. In countries with a relatively large share of natural resources in exports, structural change has typically been growth-reducing. Even though these enclave sectors usually operate at very high productivity, they cannot absorb the surplus labor from agriculture. By contrast, competitive or undervalued exchange rates and labor market flexibility have contributed to growth-enhancing structural change.

Suggested Citation

  • McMillan, Margaret & Rodrik, Dani, 2012. "Globalization, structural change, and productivity growth:," IFPRI discussion papers 1160, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:ifprid:1160
    as

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/ifpridp01160.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mundlak, Yair & Butzer, Rita & Larson, Donald F., 2012. "Heterogeneous technology and panel data: The case of the agricultural production function," Journal of Development Economics, Elsevier, vol. 99(1), pages 139-149.
    2. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 245-276.
    3. Fernandes, Ana M., 2007. "Trade policy, trade volumes and plant-level productivity in Colombian manufacturing industries," Journal of International Economics, Elsevier, vol. 71(1), pages 52-71, March.
    4. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    5. Thurlow, James & Wobst, Peter, 2004. "The road to pro-poor growth in Zambia: past lessons and future challenges," DSGD discussion papers 16, International Food Policy Research Institute (IFPRI).
    6. Maurice Kugler & John Haltiwanger & Adriana Kugler & Marcela Eslava, 2009. "Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia," 2009 Meeting Papers 615, Society for Economic Dynamics.
    7. Horn Welch, Karen & McMillan, Margaret & Rodrik, Dani, 2002. "When Economic Reform Goes Wrong: Cashews in Mozambique," CEPR Discussion Papers 3519, C.E.P.R. Discussion Papers.
    8. Stefano Scarpetta: & John Haltiwanger & Eric Bartelsman:, 2007. "Cross Country Differences in Productivity: The Role of Allocative Efficiency," 2007 Meeting Papers 134, Society for Economic Dynamics.
    9. Pedro Cavalcanti Ferreira & JosÈ Luiz Rossi, 2003. "New Evidence from Brazil on Trade Liberalization and Productivity Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1383-1405, November.
    10. Eva Paus & Nola Reinhardt & Michael Robinson, 2003. "Trade liberalization and productivity growth in latin american manufacturing, 1970–98," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(2), pages 127-127.
    11. Marcel P. Timmer & Gaaitzen J. de Vries, 2009. "Structural change and growth accelerations in Asia and Latin America: a new sectoral data set," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 3(2), pages 165-190, June.
    Full references (including those not matched with items on IDEAS)

    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. McMillan, Margaret & Rodrik, Dani & Verduzco-Gallo, Íñigo, 2014. "Globalization, Structural Change, and Productivity Growth, with an Update on Africa," World Development, Elsevier, vol. 63(C), pages 11-32.
    2. Avraham Ebenstein & Ann Harrison & Margaret McMillan & Shannon Phillips, 2014. "Estimating the Impact of Trade and Offshoring on American Workers using the Current Population Surveys," The Review of Economics and Statistics, MIT Press, vol. 96(4), pages 581-595, October.
    3. Prakash Kumar Shrestha, 2017. "Economic Liberalization in Nepal: Evaluating the Changes in Economic Structure, Employment and Productivity," Journal of Development Innovations, KarmaQuest Internatioinal, vol. 1(1), pages 60-83, February.
    4. Daniela Maggioni, 2013. "Productivity Dispersion and its Determinants: The Role of Import Penetration," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 537-561, December.
    5. Lo Turco, Alessia & Maggioni, Daniela, 2013. "Does Trade Foster Employment Growth in Emerging Markets? Evidence from Turkey," World Development, Elsevier, vol. 52(C), pages 1-18.
    6. Douglas A. Irwin, 2019. "Does Trade Reform Promote Economic Growth? A Review of Recent Evidence," Working Paper Series WP19-9, Peterson Institute for International Economics.
    7. Diego Restuccia & Richard Rogerson, 2017. "The Causes and Costs of Misallocation," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
    8. Iacovone, Leonardo & Rauch, Ferdinand & Winters, L. Alan, 2013. "Trade as an engine of creative destruction: Mexican experience with Chinese competition," Journal of International Economics, Elsevier, vol. 89(2), pages 379-392.
    9. Matthias Meier & Ariel Mecikovsky & Christian Bayer, 2014. "Dynamics of Factor Productivity Dispersions," 2014 Meeting Papers 719, Society for Economic Dynamics.
    10. Maurice Kugler & John Haltiwanger & Adriana Kugler & Marcela Eslava, 2009. "Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia," 2009 Meeting Papers 615, Society for Economic Dynamics.
    11. Nataraj, Shanthi, 2011. "The impact of trade liberalization on productivity: Evidence from India's formal and informal manufacturing sectors," Journal of International Economics, Elsevier, vol. 85(2), pages 292-301.
    12. repec:kqi:journl:2017-1-4 is not listed on IDEAS
    13. Carol Newman & John Rand & Finn Tarp, 2016. "Imports, supply chains, and firm productivity," WIDER Working Paper Series 090, World Institute for Development Economic Research (UNU-WIDER).
    14. Louren篠S. Paz, 2014. "Trade liberalization and the inter-industry wage premia: the missing role of productivity," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 408-419, February.
    15. Lisboa, Marcos B. & Menezes Filho, Naercio A. & Schor, Adriana, 2010. "The Effects of Trade Liberalization on Productivity Growth in Brazil: Competition or Technology?," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 64(3), September.
    16. Carol Newman & John Rand & Finn Tarp, 2016. "Imports, supply chains, and firm productivity," Working Paper Series UNU-WIDER Working Paper w, World Institute for Development Economic Research (UNU-WIDER).
    17. Paz, Lourenco, 2012. "Trade liberalization and inter-industry productivity spillovers: an analysis of the 1989-1998 Brazilian trade liberalization episode," MPRA Paper 38859, University Library of Munich, Germany.
    18. Torfinn Harding & Jørn Rattsø, 2010. "Industrial labour productivities and tariffs in South Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 459-485, July.
    19. Tinh Doan & Son Nguyen & Huong Vu & Tuyen Tran & Steven Lim, 2016. "Does rising import competition harm local firm productivity in less advanced economies? Evidence from the Vietnam's manufacturing sector," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(1), pages 23-46, February.
    20. Benjamin Aleman-Castilla, 2006. "The Effect of Trade Liberalization on Informality and Wages: Evidence from Mexico," CEP Discussion Papers dp0763, Centre for Economic Performance, LSE.
    21. Baybars Karacaovali, 2011. "Productivity Matters For Trade Policy: Theory And Evidence," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 33-62, February.

    More about this item

    Keywords

    Labor productivity; Labor;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:fpr:ifprid:1160. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ifprius.html .

    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: (email available below). General contact details of provider: https://edirc.repec.org/data/ifprius.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.