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Key sectors in economic development: a perspective from input-output linkages and cross-sector misallocation

Leal-Ordoñez Julio C.
Authors registered in the RePEc Author Service: Julio César Leal Ordóñez

No 2015-23, Working Papers from Banco de México

Abstract: For a typical developing country, this paper shows that once inter-sectoral linkages are taken into account, closing the productivity gap in a number of services gives bigger gains in aggregate productivity than closing it in agriculture or in manufacturing. This is performed in the context of an input-output economy and general equilibrium. Also, the importance of sector-specific distortions that produce cross-sector misallocation is addressed. I compute the effect of the removal of these distortions on aggregate productivity using the input-output model and find that this could increase productivity up to 68%, depending on whether the rents from distortions stay in the economy or not.

Keywords: sectors; economic development; input-output linkages; cross-sector misallocation. (search for similar items in EconPapers)
JEL-codes: O1 O41 C67 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff
Date: 2015-11
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