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Structural Change in an Open Economy

Kei-Mu Yi and Jing Zhang ()

No 595, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: We develop a tractable, three-sector model to study structural change in an open economy. The model features an endogenous pattern of trade dictated by comparative advantage. We derive an intuitive expression linking sectoral employment shares to sectoral expenditure shares and to sectoral net export shares of total GDP. Changes in productivity and in trade barriers affect expenditure and net export shares, and thus, employment shares, across sectors. We show how these driving forces can generate the "hump" pattern that characterizes the manufacturing employment share as a country develops, even when manufacturing is the sector with the highest productivity growth.

Keywords: structural transformation; international trade; sectoral labor reallocation (search for similar items in EconPapers)
JEL-codes: F20 F40 O13 O41 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2010-04
New Economics Papers: this item is included in nep-int
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http://www.fordschool.umich.edu/rsie/workingpapers/Papers576-600/r595.pdf

Related works:
Journal Article: Structural change in an open economy (2013) Downloads
Working Paper: Structural change in an open economy (2013) Downloads
Working Paper: Structural change in an open economy (2011) Downloads
Working Paper: Structural Change in an Open Economy (2009) Downloads
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