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Structural Transformation in South Asia: Does the Pattern Ensure Growth Momentum?

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  • Raghbendra Jha
  • Sadia Afrin

Abstract

We model the evolution and determinants of shares of agriculture, manufacturing and services to gross domestic product for four South Asian countries (Bangladesh, India, Sri Lanka and Pakistan) for 41 years (1974–2018) to understand their structural transformation pattern. Determinants of shares were classified into three broad categories: ‘country fundamentals’, ‘policy’ and ‘decadal dummies’. This is the first article to investigate the empirical regularities of the structural transformation pattern and their determinants for this region. The generalized least squares estimation technique for panel data was applied. We find mixed evidence in support of structural transformation. With the increase in per capita income, the share of agriculture decreases and that of services increases, partially supporting the Kuznets hypothesis; however, the share of manufacturing sector shows a more tepid rise and even decreases in some model specifications. Thus, the Kuznets model of structural transformation is supported to some extent, but not strongly for these countries. JEL: C22, C23, F63, O11

Suggested Citation

  • Raghbendra Jha & Sadia Afrin, 2021. "Structural Transformation in South Asia: Does the Pattern Ensure Growth Momentum?," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 22(1), pages 7-28, March.
    • Handle: RePEc:sae:soueco:v:22:y:2021:i:1:p:7-28
    DOI: 10.1177/1391561421989855
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    References listed on IDEAS

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    1. World Bank, "undated". "South Asia Economic Focus, Spring 2019," World Bank Publications - Reports 31498, The World Bank Group.
    2. Raghbendra Jha & Sadia Afrin, 2016. "Pattern and determinants of structural transformation in Africa," Departmental Working Papers 2016-01, The Australian National University, Arndt-Corden Department of Economics.
    3. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-452, May.
    4. Allan G. B. Fisher, 1939. "Production, Primary, Secondary And Tertiary," The Economic Record, The Economic Society of Australia, vol. 15(1), pages 24-38, June.
    5. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-258, June.
    6. John Laitner, 2000. "Structural Change and Economic Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 545-561.
    7. Ms. Era Dabla-Norris & Mr. Alun H. Thomas & Mr. Rodrigo Garcia-Verdu & Ms. Yingyuan Chen, 2013. "Benchmarking Structural Transformation Across the World," IMF Working Papers 2013/176, International Monetary Fund.
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    Cited by:

    1. Raghbendra Jha & Ashok Sharma, 2023. "India Needs a Military Industrial Complex: Economic and Defence Imperatives for a Resurgent India," ASARC Working Papers 2023-01, The Australian National University, Australia South Asia Research Centre.

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    More about this item

    Keywords

    South Asia; structural transformation; economic growth; GLS;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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