A Three-Sector Model of Structural Transformation and Economic Development

El-hadj Bah

MPRA Paper from University Library of Munich, Germany

Abstract: Growth accounting exercises point to aggregate TFP dierences as the dominant source of the large cross-country income dierences. In this paper, I ask which sectors account for the aggregate TFP gap between rich and poor countries. Data limitations for developing countries have led researchers to use indirect methods for estimating sectoral TFPs. This paper proposes a new approach for estimating sectoral TFP using panel data on sectoral employment shares and GDP per capita. The approach builds a model of structural transformation and uses it to infer sectoral TFP time series consistent with the reallocation of labor between sectors and GDP per capita growth of a set of developing countries over a 40-year period. I nd that relative to the US, developing countries are the least productive in agriculture, followed by services and then manufacturing. While these ndings are consistent with empirical studies, they dier from ndings in the growth literature.

Keywords: Productivity; Sectoral TFP; Structural Transformation; Eco- nomic growth; Economic Development (search for similar items in EconPapers)
JEL-codes: E10 O14 O41 O47 (search for similar items in EconPapers)
Date: 2007-11, Revised 2008-09-19
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://mpra.ub.uni-muenchen.de/10654/1/MPRA_paper_10654.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/32518/2/MPRA_paper_32518.pdf revised version (application/pdf)

Related works:
Working Paper: A Three-Sector Model of Structural Transformation and Economic Development (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10654

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