Structural change and the ability to sustain growth
Neil Foster-McGregor, Ibrahima Kaba & Adam Szirmai
#2015-048
This paper examines the relationships between structural characteristics
and the ability to sustain growth. The analysis is based on a novel
dataset of sectoral shares in GDP and growth rates for 108 countries
from 1960 to 2010. Rather than focusing exclusively on average growth
rates, the paper examines the characteristics of positive growth
episodes. Dependent variables include the duration of positive growth
episodes and the risk that such growth episodes come to an end.
Structural characteristics include the degree of sectoral
specialisation, the share of manufacturing and the share of the modern
sector in GDP. We find that higher shares of manufacturing, high and
increasing shares of the modern sector and a more diversified structure
of production contribute to longer duration of growth episodes and
reduced volatility of growth patterns. The effects of these same
variables on average growth rates are much more ambiguous.
JEL Classification: O4, O14, 047, L16
Key words: duration of growth, volatility, specialisation,
diversification, structure, structural change, structural transformation