Factor Reallocation and Growth in Developing Coutries

30 Pages Posted: 1 Feb 2006

See all articles by Hélène Poirson

Hélène Poirson

International Monetary Fund (IMF) - Research Department

Date Written: June 2000

Abstract

This paper examines the extent to which developing countries benefit from intersectoral factor transfers by specifying the impact and determinants of sectoral changes and of the degree of dualism (or allocation inefficiency) in a dual economy model. Conditions under which factor reallocation is growth-enhancing are derived. An empirical error-correction equation is estimated for 30 developing countries during 1965-80. Results suggest that labor reallocation effects are especially important in countries with high rates of investment (and thus high rates of labor transfer) and/or at low levels of development (and thus high degrees of dualism).

Keywords: Factor reallocation, dualism, growth

JEL Classification: O11, O41

Suggested Citation

Poirson Ward, Helene, Factor Reallocation and Growth in Developing Coutries (June 2000). IMF Working Paper No. 00/94, Available at SSRN: https://ssrn.com/abstract=879643

Helene Poirson Ward (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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