Structural Change, Fundamentals and Growth: A Framework and Case Studies
Developing countries made considerable gains during the first decade of the 21st century. Their economies grew at unprecedented rates, resulting in large reductions in extreme poverty and a significant expansion of the middle class. But more recently that progress has slowed with an economic environment of lackluster global trade, not enough jobs coupled with skills mismatches, continued globalization and technological change, greater income inequality, unprecedented population aging in richer countries, and youth bulges in the poorer ones. This essay examines how seven key countries fared from 1990-2010 in their development quest. The sample includes seven developing countries—Botswana, Ghana, Nigeria, Zambia, India, Vietnam and Brazil —all of which experienced rapid growth in recent years, but for different reasons. The patterns of growth are analyzed in each of these countries using a unifying framework which draws a distinction between the “structural transformation” and “fundamentals” challenge in growth. Out of these seven countries, the traditional path to rapid growth of export oriented industrialization only played a significant role in Vietnam.
This project was funded by the World Bank Knowledge for Change Program. Chapter authors participated in a workshop at the World Bank, co-hosted by the International Food Policy Research Institute (IFPRI) in 2012. We would like to thank all those who participated as discussants and observers; their comments were extremely helpful in shaping the direction of this volume. We are also grateful for the assistance of the Publication Review Committee at IFPRI and the comments received from anonymous reviewers. The authors acknowledge the support of the CGIAR Research Program on Policies, Institutions, and Markets (PIM) led by IFPRI. Finally, we would like to thank Xinshen Diao and Ann Harrison for their encouragement and support throughout the process. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.