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How Structural Change Differs, and Why it Matters (for Economic Growth)

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  • Keld Laursen

Abstract

Several types of theoretical literature on the topic of trade, growth and specialisation, including neoclassical approaches, post-Keynesian literature and some models in evolutionary economics, have shown that it is possible enjoy higher rates of economic growth, given the presence of certain sectors in the economy, being it high-tech or fast-growing sectors. This paper investigates these propositions empirically. Basically the idea is to conduct a constant market share (CMS) analysis, and afterwards include the obtained effects in regression models, using panel data techniques in explaining aggregate economic growth. The results display that the fixed effects model is the most appropriate technique, and that using this tool, the initial level of income (the catch up variable) is significant and has a negative sign as expected. The investment (growth of the capital stock) variable is also significant, while the growth adaptation effect (measuring whether the country in question has actively (more than the average country) moved into slow or fast growing sectors) is the only significant variable (positive sign) of the CMS effects. Hence, it is concluded that a certain dynamism in terms of structural change is required by countries in order to achieve high levels of economic growth at the macro level. The final part of the paper deals with the question of whether the fast-growing sectors (as measured in the CMS analysis) are high-tech or not. Based on a comparison between the OECD growth vector from the CMS analysis, on the one hand, and R&D intensities in the 22 sectors (for the 1970s and for the 1980s), on the other, it is concluded that the fast-growing sectors are in general also high-tech sectors.

Suggested Citation

  • Keld Laursen, 1998. "How Structural Change Differs, and Why it Matters (for Economic Growth)," DRUID Working Papers 98-25, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:98-25
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    1. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
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    6. Bent Dalum & Keld Laursen & Gert Villumsen, 1998. "Structural Change in OECD Export Specialisation Patterns: de-specialisation and 'stickiness'," International Review of Applied Economics, Taylor & Francis Journals, vol. 12(3), pages 423-443.
    7. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-348, November.
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    Cited by:

    1. Julia Wörz, 2005. "Skill Intensity in Foreign Trade and Economic Growth," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 117-144, March.
    2. Roland-Holst, David, 2004. "CGE Methods for Poverty Incidence Analysis: An Application to Vietnam’s WTO Accession," Conference papers 331305, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Peter Mayerhofer, 2007. "Stadtwirtschaft im Umbruch - Wiens Beschäftigungssystem unter neuen Rahmenbedingungen," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 33(1), pages 11-40.
    4. Peter Mayerhofer & Oliver Fritz & Dieter Pennerstorfer, 2010. "Dritter Bericht zur internationalen Wettbewerbsfähigkeit Wiens," WIFO Studies, WIFO, number 42430.
    5. Dora Borbély, 2004. "Competition among Cohesion and Accession Countries: Comparative Analysis of Specialization Within the EU Market," EIIW Discussion paper disbei122, Universitätsbibliothek Wuppertal, University Library.
    6. Kaveri Deb, 2022. "Trade Structure and Economic Growth in Emerging and Developing Asia: A Dynamic Panel Analysis," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(3), pages 601-628, September.

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    More about this item

    Keywords

    trade specialisation; economic growth; constant market share analysis; panel data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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