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Structural modernization and development traps : an empirical approach

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  • Lavopa A.
  • Szirmai A.

    (UNU-MERIT)

Abstract

In this paper we analyse economic development through the lenses of a newly developed index the structural modernization index. This index combines two dimensions that have been widely invoked as prime drivers of economic development namely, structural change and technological catch up. For each country, the index calculates the productivity gap with respect to the world frontier in activities that typically represent the modern part of the economy, and weighs this relative productivity by the employment share of those activities in the total labour force. In doing so, it combines a technological dimension relative productivity and a structural dimension the size of the modern sector thus providing a concise measure of the degree of modernity of an economy. The index is calculated for a large sample of countries over a long time span. Significant efforts have been made to put together a dataset with international comparable data on value added and employment disaggregated by sectors for 100 countries covering the period 1950-2009. The estimates are used to explore the relationship between structural modernization and the so-called poverty and middle-income traps. In analysing this relationship, the interactive nature of structural change and technological catch up is stressed. Important insights are obtained regarding the nature of low and middle-income development traps. Finally, the usefulness of this new index is illustrated when studying the diverse structural trajectories of a set of countries that can be taken as examples of success and failure in the process of economic development.

Suggested Citation

  • Lavopa A. & Szirmai A., 2014. "Structural modernization and development traps : an empirical approach," MERIT Working Papers 076, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2014076
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    Cited by:

    1. Pineli, Andre & Narula, Rajneesh & Belderbos, Rene, 2019. "FDI, multinationals and structural change in developing countries," MERIT Working Papers 004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Dan Su & Yang Yao, 2017. "Manufacturing as the key engine of economic growth for middle-income economies," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(1), pages 47-70, January.
    3. repec:bec:imsber:v:10:y:2018:i:4:p:121-142 is not listed on IDEAS
    4. Dosi, Giovanni & Roventini, Andrea & Russo, Emanuele, 2019. "Endogenous growth and global divergence in a multi-country agent-based model," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 101-129.
    5. repec:gam:jsusta:v:11:y:2019:i:6:p:1771-:d:216751 is not listed on IDEAS
    6. Sartorello Spinola, Danilo, 2018. "Instability constraints and development traps: An empirical analysis of growth cycles and economic volatility in Latin America," MERIT Working Papers 002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Naude, Wim & Nagler, Paula, 2015. "Industrialisation, Innovation, Inclusion," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Nuvolari, Alessandro & Russo, Emanuele, 2019. "Technical progress and structural change: a long-term view," MERIT Working Papers 022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Page John, 2018. "Rowing against the current: Diversification in Africa’s resource-rich economies," WIDER Working Paper Series 68, World Institute for Development Economic Research (UNU-WIDER).
    10. Foster-McGregor, Neil & Kaba, Ibrahima & Szirmai, Adam, 2015. "Structural change and the ability to sustain growth," MERIT Working Papers 048, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Mensah, Emmanuel & Owusu, Solomon & Foster-McGregor, Neil & Szirmai, Adam, 2018. "Structural change, productivity growth and labour market turbulence in Africa," MERIT Working Papers 025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    Macroeconomic Analyses of Economic Development; Industrialization; Manufacturing and Service Industries; Choice of Technology; Technological Change; Research and Development; Intellectual Property Rights: General; Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence; Economywide Country Studies: General;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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