Framing Structural Transformation in South Africa and Beyond

Structural transformation is a complex, long-term historical process entailing both structural change in the sectoral composition of an economy, as well as broader societal changes in the productive organizations, institutions, and political economy of a country. With a focus on South Africa as a middle-income country, this chapter advances a holistic and integrated perspective on the nature and dynamics of structural transformation and highlights a specific set of interlocking critical factors and dimensions. These are: the processes of learning and productive capabilities development and accumulation; technological change—digitalization, specifically—and its relationship with sustainability; power dynamics along global value chains (GVCs) and their relation to inequality; and finally, the political economy of development and the role of the state. Over the course of its democratic history, since 1994, South Africa has not undergone sustained and thoroughgoing structural transformation. Despite some areas of partial success, there has been premature deindustrialization, lack of sufficient development of the local production system alongside integration into GVCs, and persistent cross-cutting challenges of inclusiveness and sustainability. Here it is argued that the holistic and integrated framework developed by the authors can help in developing a policy approach towards effective and feasible packages of industrial policies for structural transformation.

The Political Economy of Work and Welfare

The political economy of Irish work and welfare has dramatically changed over recent decades. Since the 1980s, Ireland has experienced two periods of high unemployment followed by two periods of full employment. Alongside this, we see considerable shifts in both the sectoral composition of the workforce and in the institutional architecture underpinning the labour market. Focusing on the last decade, this chapter contextualizes the Irish labour market in the Irish growth model, highlighting issues including occupational upgrading, low pay, gender composition, and migration. The chapter then explores links between this employment structure and Ireland’s changing welfare regime. It considers recent institutional changes, as the welfare regime shifted to a work-first form of activation, and the long-term sustainability of the social protection system. The chapter concludes by highlighting what we see as the core challenges for the political economy of work and welfare in Ireland.

Economic growth dynamics of the East African region

The article is devoted to the description of the dynamics of the economic development of the East African states. The paper gives a description of the current economic situation of the East African countries, lists the states included in the East African region, gives the economic and geographical characteristics of the studied region. The author also analyses the evolution of the sectoral composition of gross domestic product (GDP) of the East African countries, considers the economic factors that influence the economic growth of the states of the region. The study analyses the problem of employment and unemployment in the East African countries. The paper considers the ways of improving the economic development of the region, in particular, economic diversification, inclusive growth and structural transformation, as well as structural and institutional measures that would encourage productive investment in the economy.

Economic Diversification under Saudi Vision 2030

The last decade has brought a row of substantial changes that have profound implications for the traditional hydrocarbon resource-rich economies. Economic conditions may change radically either throughout a decade or within months. The question is whether there is no other option for a hydrocarbon resource-rich economy than to be held hostage to the fluctuations in global oil prices. The general answer to a changing environment is: Adapt! From the macroeconomic perspective, this means diversifying the economy to broaden the income base and significantly reduce the dependence on oil revenues. The Saudi Vision 2030 represents a complex plan for substantial socioeconomic adjustments that are about to move the economy toward a more diversified and sustainable one. This discussion paper examines the preferred diversification paths for the Saudi economy in more detail, with a focus on the foreseen adjustments in the sectoral composition of the economy along with broader macroeconomic shifts. The evaluation of the foreseen diversification impacts is based on the updated Vision 2030 Input-Output Table that maps the changing structure of the Saudi economy over the coming decade. We discuss the assumed expansion of the diversification frontrunners, their changing contribution to the overall economic activity and identify the preferred diversification paths for the Saudi economy. The advances in economic diversification are measured by applying the Shannon-Weaver index to sectoral GDP and household income. The expected sectoral changes are wide-reaching, so the basic macroeconomic relations are also subject to adjustments. We also conduct a sensitivity analysis to examine the effects of the foreseen diversification on the resilience of the Saudi economy to external shocks.

HETEROGENEOUS EFFECT OF SECTORAL COMPOSITION ON THE GREEN TECHNOLOGY INNOVATIONS IN ASIA’S MIDDLE-INCOME COUNTRIES

This study examines the extent to which sectoral composition can affect green technology innovations in 20 selected Asia’s Middle-Income countries from 1995 until 2016. To measure the cross-sectional dependence among cross-sectional units and allows heterogeneous coefficients in a panel, this study will adopt the Dynamic Common Correlated Effect (DCCE). The results show that an increase in the proportion of industry and services sectors plays an important role in innovations of environmentally friendly technology. It is also knowing that the tourism sector and pollution level would be a prospect for green technology innovations. On the contrary, the increasing proportion of the agriculture sector may hinder green innovations. The finding of this study can be helpful for policymakers in middle-Income countries to promote a balance of green technology development in each sector for the sake of comprehensive sustainable development.

Agricultural Trade and Structural Change: Evidence from Paraguay

We study how international trade affects structural change in an agricultural exporting country. For this purpose, we calibrate a three-sector growth model to quantify the role of international trade in explaining structural change patterns observed in Paraguay. This country experienced a significant rise in net agricultural exports as a percentage of aggregate output during the period 1962–2012. We find the following results. First, international trade is crucial to explain the sectoral composition of employment in this country. The model including trade explains 84.2% of observed changes in employment shares during this period, while the model without trade can only account for 35.6% of observed changes. Second, employment in agriculture remains large in order to satisfy foreign demand. Third, employment shifts directly from agriculture into services in the long run, bypassing manufacturing. These patterns can only be explained by the rise in net agricultural exports.

Investment Demand and Structural Change

We study the joint evolution of the sectoral composition and the investment rate of developing economies. Using panel data for several countries in different stages of development, we document three novel facts: (a) the share of industry and the investment rate are strongly correlated and follow a hump‐shaped profile with development, (b) investment goods contain more domestic value added from industry and less from services than consumption goods do, and (c) the evolution of the sectoral composition of investment and consumption goods differs from the one of GDP. We build a multi‐sector growth model to fit these patterns and provide two important results. First, the hump‐shaped evolution of investment demand explains half of the hump in industry with development. Second, asymmetric sectoral productivity growth helps explain the decline in the relative price of investment goods along the development path, which in turn increases capital accumulation and promotes growth.

Demonetization and Movement Towards Digital Cashless Indian Economy

One of the greatest painful, un-stabilizing self-imposed macroeconomic blows on the Indian economy occurred in the absence of a short-term crisis when the government decided to announce a major change in the macroeconomic environment by demonetizing the high value currency notes – of Rs 500 and Rs 1000. These two denominations ceased to be legal tender from midnight of 8th of November 2016. The reasons offered for demonetization are two-fold: one, to control counterfeit notes that could be contributing to terrorism, in other words a national security concern; and second, to undermine or eliminate the “black economy.” It has also been a step forward towards a digital cashless economy. In this study an attempt is being made to present a discussion on both the short- and long-run effects of demonetization. It attempts to throw light on the impact of some macroeconomic variables—GDP, sectoral composition, industrial production, inflation, employment—using secondary time-series analysis. The empirical analysis clearly reveals that contraction of currency in circulation was one of the most important factors responsible for decrease in GDP in India after the period of demonetization. Apart from the issue of transition, confronted by the banking system, the government initiative was needed to neutralize the short-term, medium-term, and long-term effects particularly on regularization of cash flows, withdrawals, income, employment, inflation, consumption, and production. Moreover, cyber and other digital security measures were also essential to curb any kinds of frauds and encourage people towards a more digital cashless economy.

Prospects of Indian direct investments in Russian economy

The article examines major trends and prospects regarding the Indian direct investment in the economy of the Russian Federation. The authors comprehensively analyze key factors, the scale, regional and sectoral composition of the Indian direct investment in the Russian economy, scrutinize the evolution of sectoral and regional composition of the Indian FDI, as well as define main challenges and obstacles that investors from India face in Russia and identify medium-term prospects for the Indian capital in the Russian Federation. The research shows that in the current circumstances the significance of the Indian capital in form of direct investment for Russia is substantially growing; its regional presence is steadily increasing; the sectoral diversification of the Indian investment is intensifying. The important indicator in this case is the quality of the Indian capital, its gradually increasing high-technology component. Not only the scale of the Indian direct investment in the Russian economy is changing, but also there is the rise in number of companies investing in Russia. At the same time, if in the early 2000s those companies were mainly large Indian MNCs, nowadays there is an increased interest in Russia among small and medium-sized high-technology enterprises of India that promote innovative development of the Russian regions. Of utmost importance is the fact that the Indian capital is also invested in small-scale industry, promoting upgrade of technological equipment of small and medium-sized enterprises in Russia. These noticeable changes in the Indian capital movement will substantially contribute to enhanced economic cooperation between the two countries.