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Structural modernisation and development traps. An empirical approach

Alejandro Lavopa and Adam Szirmai

World Development, 2018, vol. 112, issue C, 59-73

Abstract: This paper explores the relationship between trajectories of structural modernisation and the ability of countries to escape poverty and middle-income traps. The analysis is based on a newly created index of structural modernisation. For each country, the index calculates the productivity gap with respect to the world frontier in activities that typically represent the modern sector of the economy, and weights this relative productivity by the employment share of those activities in the total labour force. The index is calculated for 114 countries from 1960 to 2014. A country is defined as trapped if it takes longer than a benchmark period to move from one income category to another. The analysis shows that expansion of the size of the modern sector without a process of absorption of technology for reducing the technology gap is not enough to ensure steady growth. Inversely, reducing the technology gap in just few sectors will produce an enclave economy that is doomed to stagnate.

Keywords: Structural change; Technological catch up; Structural Modernization Landscape; Development traps (search for similar items in EconPapers)
JEL-codes: O11 O14 O30 O47 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Structural modernization and development traps: an empirical approach (2014) Downloads
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