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The Role of Structural Change in the Economic Development of Asian Economies

Author

Listed:
  • Neil Foster--McGregor

    (Research Fellow, UNU-MERIT, Boschstraat, Maastricht, Netherlands)

  • Bart Verspagen

    (Director, UNU-MERIT, Boschstraat, Maastricht, Netherlands)

Abstract

In this paper, we combine data on gross domestic product (GDP) per capita and sectoral employment shares to undertake a decomposition of GDP per capita growth for a sample of 43 Asian and non-Asian economies. We decompose income changes into three components: (i) changes in labor productivity within sectors, (ii) employment shifts across sectors (structural change), and (iii) changes in the intensity of employment participation. We then compare the decomposition results for the Asian economies that moved between different income levels of interest with those from a representative typical economy and other comparison economies. The results suggest that in most Asian economies labor productivity growth was the dominant source of gains in GDP per capita, with the observed gains in labor productivity often driven by changing labor productivity within sectors rather than by shifts in employment across sectors. This is not to diminish the role of structural change, which at lower income levels can explain a significant proportion of overall labor productivity growth.

Suggested Citation

  • Neil Foster--McGregor & Bart Verspagen, 2016. "The Role of Structural Change in the Economic Development of Asian Economies," Asian Development Review, MIT Press, vol. 33(2), pages 74-93, September.
    • Handle: RePEc:tpr:adbadr:v:33:y:2016:i:2:p:74-93
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    3. Sharif, Naubahar & Chandra, Kevin & Mansoor, Athar & Sinha, Kirti Bhasin, 2021. "A comparative analysis of research and development spending and total factor productivity growth in Hong Kong, Shenzhen, Singapore," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 108-120.
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    7. Mensah, Emmanuel & Owusu, Solomon & Foster-McGregor, Neil & Szirmai, Adam, 2018. "Structural change, productivity growth and labour market turbulence in Africa," MERIT Working Papers 2018-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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    More about this item

    Keywords

    labor productivity; structural change; structural decomposition;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • 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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