The Oxford Handbook of Structural Transformation

2019 ◽  
Keyword(s):  
Structural Change ◽  
Structural Transformation ◽  
Relative Price ◽  
Financial Reforms ◽  
Income Effects ◽  
Existing Structures ◽  
Industrial Parks ◽  
Economic Forces ◽  
Price Effects ◽  
The Relationship

This book examines a variety of topics relating to structural transformation, such as why such transformations are associated with persistently high unemployment; the ‘flying-geese’ theory introduced by Japanese economist Kaname Akamatsu in the mid-1930s; mutual, two-way dependence of structural transformation and food security; a competitiveness-based view of structural transformation; the link between world trade and structural change from 1800 to present; the relationship between financial reforms, financial development, and structural change; sustainable structural change in the context of global value chains; and the commonly used strategies to build effective clusters and industrial parks. The book also discusses the specific problems that arise when composing an index of structural change and development, and suggests ways to address them; how structural change can be formally modelled in New Structural Economics (NSE); and some of the key elements of the knowledge accumulated in development economics. Furthermore, it identifies three key economic forces that drive structural transformation: the first emphasizes income effects, while the other two both emphasize relative price effects. The experiences of regions and countries such as Latin America, the West African Economic and Monetary Union (WAEMU), India, Egypt, Viet Nam, China, Korea, Taiwan, Ethiopia, and Tanzania with respect to structural transformation are also analysed. Finally, the book considers what is harmful in the existing structures, what goals we want any new structures to serve, and what structures would serve the chosen goals.

Structural Transformation and Growth

2019 ◽  
pp. 44-69
Author(s):  
Richard Rogerson
Keyword(s):  
Structural Transformation ◽  
Growth Model ◽  
The Other ◽  
Relative Price ◽  
Aggregate Level ◽  
New Model ◽  
Balanced Growth ◽  
Income Effects ◽  
Price Effects ◽  
The Face

This chapter illustrates how structural transformation and outcomes resembling balanced growth at the aggregate level can be generated simultaneously using a growth model. It begins with a discussion of the three key economic mechanisms that drive structural transformation: the first emphasizes income effects while the other two both emphasize relative price effects. These mechanisms are then incorporated into a standard version of the growth model to test whether it is possible to obtain balanced growth and structural transformation at the same time. By extending the model to include multiple consumption sectors, a new model that generates balanced growth and structural transformation is achieved. The chapter also explains how three basic mechanisms described can drive sectoral reallocation of labour in the face of development associated with increases in productivity and capital.

scholarly journals Structural Change With Long‐Run Income and Price Effects

Econometrica ◽  
2021 ◽  
Vol 89 (1) ◽  
pp. 311-374 ◽  
Author(s):  
Diego Comin ◽  
Danial Lashkari ◽  
Martí Mestieri
Keyword(s):  
Structural Change ◽  
Developing Economies ◽  
The United States ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Household Level ◽  
Income Effects ◽  
Long Run ◽  
Level Data ◽  
Price Effects

We present a new multi‐sector growth model that features nonhomothetic, constant elasticity of substitution preferences, and accommodates long‐run demand and supply drivers of structural change for an arbitrary number of sectors. The model is consistent with the decline in agriculture, the hump‐shaped evolution of manufacturing, and the rise of services over time. We estimate the demand system derived from the model using household‐level data from the United States and India, as well as historical aggregate‐level panel data for 39 countries during the postwar period. The estimated model parsimoniously accounts for the broad patterns of sectoral reallocation observed among rich, miracle, and developing economies. Our estimates support the presence of strong nonhomotheticity across time, income levels, and countries. We find that income effects account for the bulk of the within‐country evolution of sectoral reallocation.

scholarly journals Two Perspectives on Preferences and Structural Transformation

2013 ◽  
Vol 103 (7) ◽  
pp. 2752-2789 ◽  
Author(s):  
Berthold Herrendorf ◽  
Richard Rogerson ◽  
Ákos Valentinyi
Keyword(s):  
United States ◽  
Structural Transformation ◽  
Service Sector ◽  
Value Added ◽  
The United States ◽  
Service Industries ◽  
Relative Prices ◽  
Income Effects ◽  
Output Structure ◽  
Price Effects

We assess the empirical importance of changes in income and relative prices for structural transformation in the postwar United States. We explain two natural approaches to the data: sectors may be categories of final expenditure or value added; e.g., the service sector may be the final expenditure on services or the value added from service industries. We estimate preferences for each approach and find that with final expenditure income effects are the dominant force behind structural transformation, whereas with value-added categories price effects are more important. We show how the input-output structure of the United States can reconcile these findings. (JEL E21, L16)

India’s Path to Structural Transformation

2019 ◽  
pp. 464-488
Author(s):  
Deepak Nayyar
Keyword(s):  
Economic Growth ◽  
Structural Change ◽  
Structural Transformation ◽  
Analytical Framework ◽  
Second Phase ◽  
Relative Importance ◽  
Services Sector ◽  
Primary Sector ◽  
Secondary Sector ◽  
The Relationship

This chapter examines the process of structural change in India since 1950 and compares its path to structural transformation with those of other countries. It first introduces an analytical framework to explore the relationship between economic growth and structural change, in theory and history, to identify directions of causation. It then considers significant changes in the composition of output and employment, revealing two discernible phases when economic growth drove structural change and vice versa. The first phase covered 1950–80, characterized by slow and modest structural change and in which the primary sector, essentially agriculture, declined in relative importance, to be replaced by the secondary sector, led by manufacturing. The second phase lasted between 1980 and 2010, when structural change was faster and the reduced share of agriculture in output and employment was captured primarily by the services sector, and partly by construction, but not by manufacturing. Such services-led-growth, by itself, may not be sustainable in future, so that it is necessary to revive industrialization, exploiting the potential synergies between manufacturing and services.

Intersectoral Terms of Trade for Pakistan's Economy: 1970-71 - 1981-82

1987 ◽  
Vol 26 (1) ◽  
pp. 81-105
Author(s):  
Shahnaz Kazi
Keyword(s):  
Terms Of Trade ◽  
Relative Price ◽  
Price Ratio ◽  
Sectoral Output ◽  
The Relationship

The paper estimates intersectoral terms of trade for the period from 1970-71 to 1981-82. On the basis of these results the study further analyses the relationship between terms of trade and aggregate farm output over the period. The findings indicate some improvement in agriculture's terms of trade over the Seventies. However, no conclusive support is provided to the hypothesis of high supply responsiveness of aggregate farm output to shifts in the relative price ratio of sectoral output.

Structural Transformation and Inclusive Growth

2018 ◽  
Author(s):  
Andy Sumner
Keyword(s):  
Economic Development ◽  
Structural Transformation ◽  
Inclusive Growth ◽  
Late Capitalism ◽  
Economy Model ◽  
Dual Economy ◽  
Heuristic Device ◽  
The Relationship

This chapter sets out some conceptual points of departure for the book in terms of structural transformation and inclusive growth. It revisits the Lewis model of economic development and proposes it as a heuristic device to connect structural transformation and inclusive growth. The chapter argues first, that both structural transformation and inclusive growth have tended to be defined in a reductionist sense, in a way that disconnects the two concepts. It is contended that this matters because the relationship between structural transformation and inclusive growth is embedded in—rather than separated from—the modality of late capitalism pursued. Second, that the work of pioneering development economist, W. Arthur Lewis and the Lewis dual economy model provides a useful heuristic device for thinking about the relationship between structural transformation and inclusive growth.

The Relationship between China's Export-led Growth and Its Double Transition of Demographic Change and Industrialization

2011 ◽  
Vol 10 (2) ◽  
pp. 52-76 ◽  
Author(s):  
Yang Yao
Keyword(s):  
Structural Change ◽  
Demographic Transition ◽  
Slow Growth ◽  
World Market ◽  
Domestic Consumption ◽  
Time Period ◽  
Double Transition ◽  
The World ◽  
New Thinking ◽  
The Relationship

China's export-led growth is rooted in China's double transition of demographic transition and structural change from industrialization. Accession to the WTO has allowed China to fully integrate into the world system and capture the gains of its comparative advantage in abundant labor supply. Structural change has a dampening effect on the Balassa–Samuelson effect so as to sustain China's competiveness in the world market. The double transition will take 10 to 15 years to finish; in this time period, China will likely continue its fast export-led growth. Along the way, export-led growth has also created serious structural imbalances highlighted by underutilized savings, slow growth of residential income and domestic consumption, and a heavy reliance on investment. This linkage requires new thinking when global imbalances are to be tackled.

Macroeconomic Modeling of the Relationship Between Price and Industry Proportions

2021 ◽  
pp. 10-26
Author(s):  
Valery G. Grebennikov ◽  
Keyword(s):  
Relative Price ◽  
Total Output ◽  
Social Technology ◽  
Price Ratio ◽  
Constant Ratio ◽  
Marginal Rate ◽  
Sector Model ◽  
Test Of Hypotheses ◽  
Existence And Stability ◽  
The Relationship

The article aims to examine one of the most interesting, in the authors’ opinion, applications of the two-sector model of social technology to identify the relationship between the trajectories of the relative price and the relative share of the product in the total output based on the concept of Pareto optimal, or “efficient”, trajectories of economic growth (i.e. trajectories, each point of which belongs to the surface of production opportunities). Within the framework of this concept, the ratio of prices of individual products corresponds to the marginal rates of these products’ substitution. The rates depend on the product (sectoral) structure of GDP, on the one hand, and on the available labor resources and production assets, on the other. The relationship between the investment component of the output and the growth of funds gives rise to a family of efficient trajectories, in the sense indicated above. Each of the trajectories is characterized by the joint dynamics of industry and price proportions; therefore, the main problem of the study is to examine the general properties of such trajectories. The main feature of the model under consideration is the nonlinear production functions of industries. Even the simplest Cobb–Douglas specification generates the dynamics of the main variables of the model described by a nonlinear differential equation of the second order, which cannot be integrated in general form. Therefore, the analysis of the properties of effective trajectories (at least when specific parameters of trajectories are of interest, and not just general criteria for existence and stability) required the development of a program of numerical experiments on a computer, designed for a fairly extensive test of hypotheses and the convenience of presenting and analyzing the results. To begin with, a variant of the twosector model was chosen, in the future it is planned to expand it to a significantly larger number of sectors. The properties of effective trajectories with constant parameters were analyzed: the marginal rate of product substitution (constant price ratio), constant marginal rate of resource substitution (constant ratio of factor payment rates), constant ratio of net output of industries, constant share of investments in GDP, etc. General conclusions are obtained about the conditions for the convergence of such “iso-trajectories” to trajectories with a constant GDP growth rate and about the characteristics of stationary trajectories. Of greatest interest, in the author’s opinion, is the conclusion that the existence and stability of stationary trajectories is determined by the intersectoral ratio of the elasticities of the output with respect to the funds of the sectors under consideration: for an industry producing investment products, this parameter should be of lesser importance. The derived equation, which can be interpreted as an expression of a trend that determines the form of the relationship between the proportions of industry outputs and prices in the economy, opens the way to a meaningful macroeconomic analysis of the relationships between these proportions, depending on the configuration of the parameters of social technology Ai, αi, aij, B and scenarios of their changes over time.

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