Structural transformation and productivity growth in India during 1960–2010

In this paper, we examine the role of structural change and sectoral productivity growth in explaining the aggregate productivity of India relative to the United Sates during 1960–2010. We set up a simple two sector general equilibrium model and calibrate it to fit the structural transformation of United States. Our calibrated model for India highlights the relative importance of agricultural productivity growth in explaining its slow process of catching up in terms of aggregate productivity. We show that India could have progressed at a much faster rate and closed a substantial part of its aggregate productivity gap if its agricultural sector had grown at a rate at par with the United States. It is India's relative productivity growth in the non-agricultural sector that explains all the recent success in its closing the aggregate productivity gap with the United States. We also found that an elimination of relative distortion in agriculture in India could result into a modest improvement in the aggregate labour productivity.     

Patterns of Productivity Growth and the Wage Cycle in Turkish Manufacturing

In this paper we investigate the distributional consequences of the post-1980 accumulation patterns and technological change in the Turkish manufacturing industries. We utilise two quantitative techniques. First, we make use of the Hodrick-Prescott filter to disintegrate the cyclical variations in productivity growth and wage rates from their respective historical trends, and study the evolution of the wage cycle against the long term productivity patterns in the sector. Next, we decompose the fundamental characteristics of the contributions of productivity growth of the manufacturing sub-sectors to the overall total. Our results suggest very little structural change in the sectoral composition and nature of productivity advances under the post-1980 structural adjustment reforms and outward-orientation, and underscore that the gains in productivity in this period did not materialise as gains in remunerations of wage labour. Contrary to the prognostications of the orthodox theory, the post-1980 export orientation of Turkish manufacturing was not found to lend itself to productivity contributions, and could not be sustained as a viable strategy of 'export-led industrialisation'.     

部门间生产率差距、劳动力去工业化与结构性减速

基于中国劳动力就业结构出现过快和过早去工业化的迹象，本文从部门间生产率差距的视角，利用多部门一般均衡模型、数值模拟和计量实证分析方法研究发现：（1）理论上，当服务业劳动生产率增长慢于工业，部门间生产率差距将扩大，导致劳动力去工业化速率加快；且部门间生产率差距的存在使得劳动力去工业化对经济增长产生结构性减速效应。服务业部门生产率加快提升，部门间生产率差距将会缩小，从而减缓去工业化速率和降低结构性减速压力；工业部门生产率提升尽管会扩大部门间生产率差距从而加快劳动力去工业化，但在长期中起到均匀化经济增长速率的作用。（2）利用2001—2018年中国省级和城市级面板数据的计量实证分析发现，部门间生产率差距的存在导致劳动力去工业化的效应在全时段样本下显著，但劳动力去工业化对经济增长的结构性减速效应仅在2009—2018年区间样本下显著，表明近年来中国经济增长减速与部门间生产率差距及其导致的劳动力去工业化相关。（3）赶超成功与失败国家的经验比较也表明，工业与服务业部门劳动生产率的改善与协调是跨越中等收入陷阱以及跨越后实现持续赶超的关键。     

Diversification across ASEAN-wide sectoral and national equity returns

This paper examines the effects of local and global shocks on the sector indices and national returns of the Association of Southeast Asian Nations (ASEAN) by using the univariate AR-GARCH model. We find that regional and global shocks have different influences on the ASEAN-wide sector and national equity indices. There is evidence that the ASEAN-wide sectoral returns are mostly driven by local shocks, except for the insurance and technology sectors. The volatility of Singapore's and Vietnam's national returns mostly results from their own shocks rather than local and global shocks. Applying the trend spillover model, this paper also shows that the effects of regional and global shocks on return volatility have been decreasing for almost all ASEAN-wide sectors' equity indices, while the trend for the volatility spillover effects of those shocks are positive and significant for the production and industries group sectors, as well as the food and beverage sector. Comparing the variance ratios of ASEAN sectoral and national returns, it is evident that the percentage of national equity returns belonging to their own shocks is higher than that of sectoral returns, indicating that investors might be better off diversifying their assets across countries rather than sectors in ASEAN area. This finding is consistent with the results of the mean–variance frontiers, as the portfolio composed purely of ASEAN national returns has a stronger efficiency frontier than a portfolio of all ASEAN-wide sector equity returns. By using the spanning and intersection tests, the paper also indicates that adding ASEAN national equity returns might improve the efficiency frontiers of investors' holding portfolios.     

International trade and technical progress: the role of capital good imports in Portugal>

This paper develops an empirical analysis of the relationship between sectoral openness to capital good imports and technological sophistication. Input-output data from Portugal are used to demonstrate a strong relation between capital imports and sectoral technological levels as measured by vertically integrated labour coefficients. Both regression and non-parametric analyses are used. Such a relationship demonstrates the necessity of breaking out of the long-held focus on one-time exchange gains by trade theorists. It is argued that productivity gains from trade resulting from transfers of technology are primary gains of great importance and must be incorporated into theoretical work on trade. The paper also demonstrates a strong connection between a sector's capital imports and the technical training of the workforce of the sector. This suggests a relation between a sector's level of technology and its ability to make further advances through capital imports embodying advanced foreign technology. Sectors (countries) need technically trained workers in order to achieve a successful transfer. Interestingly, it is found that while Portugal clearly utilized trade with its more developed trading partners to augment its technology, this was not enough to avoid a technological divergence from its more developed neighbours. Several reasons for this are posited.     

The Effects of Technology Changes on Sectoral Trade Patterns*

We develop a model in which sectoral trade patterns depend on both the technology common to all sectors and the technologies specific to each sector. Changes in the common technology level affect sectoral trade patterns through their impact on intertemporal optimization behavior, while changes in the sector‐specific technology levels affect sectoral trade patterns by influencing comparative advantage. The model shows: (1) unexpected increases in the common technology level worsen sectoral trade balances, but expected increases in the common technology level improve them; and (2) given other countries’ sectoral technology levels, an increase in a sector‐specific technology level relative to other sectors improves sectoral trade balances through its operation on comparative advantage. Using Japanese data, the empirical results reported in this paper support the model’s predictions.     

结构变迁与工资差距

本文构建一个现代部门技术选择内生的经济结构转变模型,来讨论结构变迁(经济结构转变)与熟练工人和非熟练工人间工资差距的关系.由于现代部门的技术选择内生于劳动力市场的供给结构,经济结构转变既影响劳动力市场的供给结构,又影响其需求结构.本文认为,在经济结构转变过程中,现代部门通过调整其技术结构,可以增加对传统部门剩余劳动力的需求,加快经济增长,同时缩小工资差距.     

Structural change and international competitiveness in Canada: an alternative approach

The neoclassical theory of international trade says little of relevance about the dramatic shifts in world trade patterns in the postwar period. Much of the weakness of the Hecksher-Ohlin-Samuelson model has been attributed to its assumption of globally uniform technology and thus the instantaneous international diffusion of technological innovation. In this paper we relax these assumptions, focusing instead on the role of innovation in the determination of international trade flows. We develop a disaggregated, dynamic Ricardian trade model (based on Pasinetti's 1981 growth model), in which the sectoral rate of process innovation is important in relation to the average innovation rate in the economy. The level of this ratio compared to that of foreign rivals drives long-run trends in international competitiveness. This is called the Pasinetti Trade Hypothesis (PTH). Ricardian comparative cost considerations form the logical foundation for the PTH in that they establish the conditions under which dynamic considerations are relevant. The model is tested for the case of Canada, during the period 1961–72, with the USA serving as a proxy for Canada's international competition. The rate of process innovation in a sector is measured as the rate of change in the vertically integrated labour coefficient in that sector. The results support the PTH in its pure and modified form and provide much weaker support for the static Ricardian hypothesis, indicating that in a world in which more than one country exports each good, the dynamics of structural change - process innovation - may be as important as static comparative cost considerations as a determinant of a sector's international competitiveness. The focus on international differences in technology and innovation rates gives support to government policies aimed at boosting sectoral innovation in relation to foreign rivals. At the least, a laissez-faire response to such ‘industrial tinkering’ by foreign competition may be extremely costly.     

Long-run sectoral development: Time-series evidence for the German economy

In economic development, long-run structural change among the three main sectors of an economy follows a typical pattern with the primary sector (agriculture, mining) first dominating, followed by the secondary sector (manufacturing) and finally by the tertiary sector (services) in terms of employment and value added. We reconsider the verbal theoretical work of Fourastié and build a simple model encompassing its main features, most notably the macroeconomic influences on the sectoral development. Estimation and analysis with German data for the period 1850–2001 show that this model is quite capable of replicating the empirical facts.     

Finance and industry: the case of Greece

This article argues that the Greek banking system contributed to the emergence of a weak, uncompetitive, and ultimately highly inefficient industrial sector. This inefficiency is quantified with the help of translog cost-curve estimates for 68 firms in eight industries. The estimation shows that Greek firms operate at too small a scale, relative to their capacity, and do not exploit scale economies. It was the structure of the financial sector, as it operated within the specific political context, that led to processes that dampened competition and ultimately distorted the country's development. The financial sector's behaviour is conditioned by three structural facets: it is an oligopoly; it possesses an internal hierarchy which is fully vertical; and it is state-owned. That the financial process led to inefficiency is confirmed by examining the counterexample of efficient industrial configurations. In this case, efficient industries were able to deny the potentially harmful policies of the financial sector. In conclusion, the structure of the financial sector, and by extension the structure of the state itself, played an important role in the Greek economy.     

Labour market institutions in open economy: Sectoral reallocations,aggregate adjustments,and spillovers

We introduce frictional unemployment in a multiworker heterogeneous firm model with a dynamic matching process, one‐ and two‐sector equilibria, and international markets. A change in labour market policies transforms the share of exporters and affects average productivity. The closure of equilibrium with or without sectoral arbitrage plays an important role in generating macro‐level outcomes for employment subsidies. Unemployment benefits, on the other hand, make unemployment and openness rise, independently of sectoral reallocations. We also find that simultaneous implementation of labour market policies remove potential gain in the trade share, and, when it comes to unemployment benefits, may even be detrimental.     

Information, the Dual Economy, and Development

We examine the interactions between different institutional arrangements in a general equilibrium model of a modernizing economy. There is a modern sector, where productivity is high but information asymmetries are large, and a traditional sector where productivity is low but information asymmetries are small. Consequently, agency costs in the modern sector make consumption lending difficult, while such lending is readily done in the traditional sector. The resulting trade-off between credit availability and productivity implies that not everyone will move to the modern sector. In fact, the laissez-faire level of modernization may fail to maximize net social surplus.
This situation may also hold in the long run: in a dynamic version of the model, a "trickle-down" effect links the process of modernization with reduction in modern sector agency costs. This effect may be too weak and the economy may get stuck in a trap and never fully modernize. The two-sector structure also yields a natural theoretical testing ground for the Kuznets inverted-U hypothesis: we show that even within the "sectoral shifting" class of models, this phenomenon is not robust to small changes in model specification.     

Explaining the increase in inequality during transition

This paper attempts to explain the increase in inequality that has been observed in all transition economies by constructing a simple model of change in composition of employment during the transition. The change consists of the 'hollowing-out' of the state-sector middle class as it moves into either the 'rich' private sector or the 'poor' unemployed sector. The predictions of the model are contrasted with the empirical evidence from annual household income surveys from six transition economies (Bulgaria, Hungary, Latvia, Poland, Russia and Slovenia) over the period 1987-95. We find that the most important factor driving overall inequality upwards was increased inequality of wage distribution. The non-wage private sector contributed strongly to inequality only in Latvia and Russia. Pensions, paradoxically, also pushed inequality up in Central Europe, while non-pension social transfers were too small everywhere and too poorly focussed to make much difference.     

Increasing wage dispersion and the changes in relative employment and wages in Mexico's urban informal sector: 1987-1993

This study analyses the role of changes in informal/formal relative employment, wage levels and wage inequality in explaining increasing wage dispersion in Mexico during the 1987–1993 period. From 1987 to 1993, the variance of the log of hourly wages for Mexican workers increased by more than 50 per cent. Using data from the Encuesta nacional de empleo urbano we find that this increase in the overall wage dispersion was mainly driven by increasing wage dispersion in the formal sector coupled with a faster growth in formal sector employment as a percentage of total employment. However, compression in the distribution of wages within the informal sector contributed to substantially slowdown the increasing overall wage inequality. About 60 per cent of the 1987–1993 4.65 percentage point reduction in the informal sector share of total employment is explained by changes in the structure that determines sectoral employment; the rest is explained by changes in the composition of the labour force, particularly increases in the sectoral education gap and a change in the regional relative share of sectoral employment. Also, from 1987 to 1993 the sectoral wage ratio increased from 0.59 to 0.63. It seems that a relative improvement in unobserved skills in the informal sector helped to close the wage differential but this effect was partially offset by an increase in the relative prices of both observed and unobserved skills, as well as increases in relative observed skills in the formal sector, particularly education.     

Labour Markets in China: A Study of the Structure and Evolution of Wages

This paper examines the development of labour markets and the evolution of a structure of wages in China, using household surveys for 1988, 1995, 2002 and 2007. It finds evidence of both provincial and sectoral segmentation in labour markets, with eastern regions and the state-controlled sector enjoying high wage premiums in the early reform period. During the reform, China has progressed slowly towards an integrated labour market with convergence in incomes between the rural non-agriculture sector and the urban market-based sector by 1995, when industry flourished in the rural areas. The wage gap between the rural non-agriculture sector and other sectors increased and the urban state-controlled sector remained segmented with respect to all other sectors up to 2002. However, the data from 2007 show there has been increasing sectoral and spatial integration.     

Services,innovation and the new economy

Several distinctive stylized facts form the new economy, an information technology service sector organized in network forms of organization, an inflation rate below its fundamentals, an increase in stock market volatility, high rates of economic growth, but apart from a small information technology manufacturing sector low productivity rates. This paper presents a model where the innovation of new service varieties can explain all of these facts. First, productivity gains are no longer realized within but between firms, as the increase in variety increases value-added per employee. Whilst service innovators, such as the information technology manufacturers, get ever more productive, individual service firms will exhibit low productivity. It is this unmeasured sectoral productivity gain, which is the key element in understanding the intrinsic inertia in the price index. Finally, the paper shows that variety in the service sector enables service providers to realize rents, where fluctuations of these rents are the basis of more than proportional changes in the firms' stock market value.     

MICROBUSINESS ACCOUNTING AND MACROECONOMIC ACCOUNTING: THE LIMITS TO CONSISTENCY*

The paper is concerned with analyzing the consistency problem that arises when the macroenterprise sector of a nation's accounting system is put on a microdata foundation. This foundation is composed of sets of microbusiness accounts, after some appropriate rearrangements and reclassifications. We pose the question: can the macroenterprise sector accounts be regarded as a consolidation of (observed) microbusiness accounts? The answer is positive from a purely conceptual viewpoint, but negative from a statistical viewpoint which preserves the decision-making records of microbusiness units. The latter phenomenon is referred to as the limits to (statistical) consistency while attempting to maintain the viability of a national accounting system. The analysis proceeds by exploiting the structural properties of market transactions matrices for a nation's economy. The results are sufficiently general to encompass the case where the transaction matrices are initially characterized by both sectoral discrepancies and transaction flow category discrepancies. In this general context it is shown that the statistical inconsistency potentially resulting from the replacement of the macroenterprise sector by an aggregation of microbusiness units has certain properties with economic meaning. This leads to a discussion that explains the ultimate rationale of statistical inconsistency: the fact that different microeconomic decision units may have different views and knowledge of common market transactions. The paper concludes with some implications for future research that appear to follow from the historical development of the subject matter.     

Must improved labor standards hurt accumulation in the targeted sector? Stylized analysis of a developing economy

This paper analyzes a stylized small open economy that consists of two tradable output-producing sectors: a manufacturing sector and a (mainly tourism-related) services sector. Assuming sectoral differences based on stylized facts, we explore the impact of higher labor standards in the manufacturing sector on the long-term prospects of the economy using comparative dynamic exercises to analyze changes in relative prices, foreign capital flows, and the sectoral distribution of investment and output. We find, in particular, that imposing higher standards across the manufacturing sector could, under certain conditions, shift the structure of the domestic economy in favor of that sector. This result is driven by changes in relative profitability in the presence of learning-by-exporting.     

Entrepreneurship, structural change, and economic growth

The ability to adjust to structural change is vital to economic development, and entries can be active participants in this process. While the importance of factor reallocations for growth is widely discussed, the role of entrepreneurs in managing these reallocations is currently not well understood. This paper analyzes the role of entry activity for adjustments of the sectoral structure and its relevance for regional economic development. The historical framework is the accelerated economic transformation that occurred in industrialized countries during the mid 1970s, resulting in an increasing need to adjust. Based on German data from 1975 to 2002, evidence is presented that sectoral reallocations are an important means for transforming entrepreneurial activity into growth.     

Unfolding the Turbulent Century: A Reconstruction of China's Historical National Accounts, 1840–19121

This paper reconstructs China's economic development between 1840 and 1912 with an estimation of Gross Domestic Product (GDP). It provides for the first time a time series of GDP (per capita) for the late Qing Dynasty (1644–1911), based on sectoral output and value added, in current as well as in constant prices. The present estimation of per capita GDP in the late Qing period comes out higher than previous estimations, but it still suggests low average levels of Chinese living standards. The economy during the late Qing Empire was characterized by a large and growing agricultural sector and displayed only minor structural changes. Only in the beginning of the twentieth century did the economy start to show signs of growth.