Factor Reallocation and Growth in Developing Countries

Hélène Poirson

No 2000/094, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the extent to which developing countries benefit from intersectoral factor transfers by specifying the impact and determinants of sectoral changes and of the degree of dualism (or allocation inefficiency) in a dual economy model. Conditions under which factor reallocation is growth-enhancing are derived. An empirical error-correction equation is estimated for 30 developing countries during 1965-80. Results suggest that labor reallocation effects are especially important in countries with high rates of investment (and thus high rates of labor transfer) and/or at low levels of development (and thus high degrees of dualism).

Keywords: WP; Factor reallocation; dualism; growth; labor productivity; reallocation effect; labor reallocation; labor coefficient; factor productivity; GDP growth; Labor productivity; Public expenditure review; Human capital; Capital productivity; Sub-Saharan Africa; South Asia; East Asia (search for similar items in EconPapers)
Pages: 29
Date: 2000-06-01
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Citations: View citations in EconPapers (13)

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