Growth and Structural Transformation
Structural transformation refers to the reallocation of economic activity across the broad sectors agriculture, manufacturing and services. This review article synthesizes and evaluates recent advances in the research on structural transformation. We begin by presenting the stylized facts of structural transformation across time and space. We then develop a multi-sector extension of the one-sector growth model that encompasses the main existing theories of structural transformation. We argue that this multi-sector model serves as a natural benchmark to study structural transformation and that it is able to account for many salient features of structural transformation. We also argue that this multi-sector model delivers new and sharper insights for understanding economic development, regional income convergence, aggregate productivity trends, hours worked, business cycles, and wage inequality. We conclude by suggesting several directions for future research on structural transformation.
We thank Francesco Caselli, Rachel Ngai, Todd Schoellman, and Gustavo Ventura for commenting on earlier versions of this manuscript and Christopher Herrington for excellent research assistance. For financial support, Herrendorf thanks the Spanish Ministry of Education (Grants ECO2009-11165 and ECO2012-31358), Rogerson thanks both the NSF and the Korea Science Foundation (WCU-R33-10005) and Valentinyi thanks the Hungarian Scientific Research Fund (OTKA) (Project K-105660-ny) The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
This research received financial support from the National Science Foundation and the Korea Science Foundation.
I have received financial support in excess of $10,000 over the last three years from the Federal Reserve Bank of Minneapolis, the Federal Reserve Bank of Atlanta, the American Enterprise Institute, the Environmental Protection Agency and the World Bank.