 Exploring unbalanced growth: Understanding the sectoral structure of the South African economyEconomic Modelling, 2018, vol. 72, issue C, 177-189 Abstract: This paper presents empirical evidence in support of an account of unbalanced growth in the South African economy: an interaction between sectorally differentiated total factor productivity growth, with a price elasticity of demand below unity. As sectors with faster TFP growth produce more real output over time, their relative prices fall, with the price changes triggering increases in consumption demand that less than offset the price fall. As a result sectoral shares in nominal output decline. This generates a structural shift of the labour factor input to low productivity sectors over time. Policies targeting returns to labour and wage growth alone will be insufficient to address unemployment. Instead, policies targeting the supply side of the economy and international competitiveness are likely more effective for raising employment and growth. The paper is the first to test the TFP-price elasticity mechanism on emerging market data, and a first explanation of unbalanced growth in South Africa. Keywords: Unbalanced growth; Supply-side; Differential TFP growth; South Africa (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:72:y:2018:i:c:p:177-189 DOI: 10.1016/j.econmod.2018.01.012 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.