A North-South Model of Structural Change and Growth

Maria Aristizabal-Ramirez, John Leahy and Linda Tesar (ltesar@umich.edu)

No 30584, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper is motivated by a set of cross-country observations on growth, structural transformation, and investment rates in a large sample of countries. We observe a hump-shaped relationship between a country's investment rate and its level of development, both within countries over time and across countries. Advanced economies reach their investment peak at a higher level of income and at an earlier point in time relative to emerging markets. We also observe the familiar patterns of structural change (a decline in the agricultural share and an increase in the services share, both relative to manufacturing). The pace of change observed in the 1930 to 1980 period in advanced economies is remarkably similar to that in emerging markets since 1960. We develop a two-region model of the world economy in which regions are isolated from each other up to the point of capital market liberalization in the early 1990s. At that point, capital flows from advanced economies to emerging markets and accelerates the process of structural change in emerging markets. The majority of gains from financial liberalization accrue to emerging economies. We consider the impact of a “second wave” of liberalization when China fully opens its economy to capital inflows.

JEL-codes: E2 F62 O10 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-fdg, nep-opm and nep-tid
Note: EFG IFM
References: Add references at CitEc
Citations:

Published as Maria Aristizabal-Ramirez & John Leahy & Linda L. Tesar, 2022. "A North-South Model of Structural Change and Growth," Journal of Monetary Economics, .

Downloads: (external link)
http://www.nber.org/papers/w30584.pdf (application/pdf)

Related works:
Journal Article: A north-south model of structural change and growth (2023)
Working Paper: A North-South Model of Structural Change and Growth (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:30584

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30584

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).