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The Structural Transformation and Aggregate Productivity in Portugal

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  • Margarida Duarte
  • Diego Restuccia

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.

Suggested Citation

  • Margarida Duarte & Diego Restuccia, 2006. "The Structural Transformation and Aggregate Productivity in Portugal," Working Papers tecipa-261, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-261
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    References listed on IDEAS

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    More about this item

    Keywords

    productivity; structural transformation; relative sectoral productivity.;
    All these keywords.

    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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