Agricultural Productivity as a Prerequisite of Industrialization: Some New Evidence on Trade Openness and Premature Deindustrialization

Arnaud Daymard ()

No 2020-07, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Most studies of structural transformation assume a closed economy when modeling. Is this assumption justified in a globalized world? I test the relevance of closed versus open economy models of structural transformation using data on the sectoral productivity levels of developed and developing countries over the 1950-2013 period. The empirical findings suggest that trade openness does affect the mechanics of structural transformation in the way predicted by the theory, but that the practical effect of trade is small. Nonetheless, the difficult creation of manufacturing jobs in Latin America and Africa—a trait commonly referred to as ”premature deindustrialization”—suggests that trade might have a significant role on the mechanics of manufacturing employment, a role that it does not play on agriculture and services. As an alternative to the role of trade, I also emphasize that large fixed costs in the formal manufacturing sector might explain the difficult industrialization of Latin America and Africa.

Keywords: structural transformation; industrialization; agricultural productivity; international trade (search for similar items in EconPapers)
JEL-codes: F41 O11 O13 O14 O41 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-agr, nep-dev, nep-eff and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2020-07

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