New results on structural change during the recent growth boom in developing countries

Dani Rodrik’s weblog: Unconventional thoughts on economic development and globalization

The last two decades have been a rare period of rapid convergence for the world's developing economies. Everyone is familiar with China and India’s experience, but growth went beyond these two large economies. Many countries in Sub-Saharan Africa and Latin America had their best performance in decades, if not ever.

In a new paper, my co-authors Xinshen Diao (IFPRI) and Margaret McMillan (Tufts and IFPRI) and I examine this experience. We ask what drove this growth and how sustainable is it. Looking at recent growth through the lens of structural change proves particularly insightful.

Here is our decomposition of recent growth accelerations into the within-sector and between-sector terms. The latter term captures the growth contribution of structural change – the reallocation of labor across sectors with different labor productivities.

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