The Role of Structural Transformation in the Potential of Asian Economic Growth

31 Pages Posted: 19 Jul 2016

Date Written: March 1, 2016

Abstract

The transition from low-income developing country to high-income developed country involves a deep process of structural transformation in which the productive structure of an economy changes. In this paper we examine this process of structural change and its link to productivity growth for a sample of Asian countries. In particular, the paper addresses the following questions:

What is the typical pattern of structural change that countries experience when they catch up from low-income levels to the economic frontier?

To what extent and in which form did structural change contribute to productivity growth in Asia since 1990?

How does the contribution of structural change to productivity growth compare to the effects of deviations of actual growth from potential growth?

How does the effect of structural change differ between total factor productivity growth and labor productivity growth?

And, what is the order of magnitude of the productivity effects that can be expected from further convergence of Asian countries to the economic structure that characterizes middle-income and high-income countries?

Keywords: labor productivity, structural decomposition, total factor productivity

JEL Classification: O14, O47

Suggested Citation

Foster-McGregor, Neil and Verspagen, Bart, The Role of Structural Transformation in the Potential of Asian Economic Growth (March 1, 2016). Asian Development Bank Economics Working Paper Series No. 479, Available at SSRN: https://ssrn.com/abstract=2811523 or http://dx.doi.org/10.2139/ssrn.2811523

Neil Foster-McGregor (Contact Author)

UNU-MERIT ( email )

Keizer Karelplein 19
Maastricht, 6211TC
Netherlands

Bart Verspagen

University of Maastricht and UNU-MERIT ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

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