Publication Type

Journal Article

Publication Date

7-2016

Abstract

Economies diversify and then re-specialize as they develop. These “stages of diversification” may result from productivity-driven structural change if initially resources are concentrated in industries other than those that dominate economic structure in the long run. A calibrated multi-industry growth model with many countries and with industry differences in productivity growth rates replicates the main features of the “stages of diversification”. We also present evidence that countries systematically shift resources towards manufacturing industries with rapid productivity growth, and towards sectors with low productivity growth, consistent with the model and supporting the “productivity mechanism” for structural transformation.

Keywords

Structural transformation, Stages of diversification, Productivity differences, Economic development

Discipline

Economics | Industrial Organization

Research Areas

Macroeconomics

Publication

Review of Economic Dynamics

Volume

21

First Page

266

Last Page

285

ISSN

1094-2025

Identifier

10.1016/j.red.2015.06.003

Publisher

Elsevier

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1016/j.red.2015.06.003

Comments

under review at The Review of Economic Studies

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