Technical progress and structural change: a long-term view
Alessandro Nuvolari & Emanuele Russo
#2019-022
Along the development path, countries experience large transformations
in their economic structure as productive resources move towards
different economic activities. “Modern economic growth” is also
associated with a self-sustained process of technical change which leads
to the emergence of new products and sectors characterized by different
scopes for productivity gains and demand growth. In this paper we study
the interactions between structural change and technological progress
from a long-term perspective. We first analyze the secular patterns of
structural change across agriculture, manufacturing and services using
historical data in the attempt to test some broad conjectures concerning
sectoral reallocations at different stages of development (i.e. the
so-called Petty-Clark law) and discuss the specific role of
manufacturing as an engine of growth. Second, we provide an overview of
the literature on sectoral innovation patterns as well as of recent
evidence linking structural transformations and sector-specific
technological opportunities to aggregate productivity growth. In the
final part we present productivity decompositions using a sectoral
innovation taxonomy to study the contribution of different groups of
activities characterized by heterogeneous innovation patterns. Our
results suggest that structural change towards knowledge-intensive
activities provides a source of productivity growth in both developing
and advanced countries. In turn, this points at the need for a more
disaggregated analysis of structural change to capture the diversity in
the rate and direction of technical progress across sectors.
Keywords: Long-run development, structural change, technical change, productivity growth
JEL Classification: O1, O14, O3