Structural modernisation and development traps. An empirical approach

•The paper presents a new index of structural modernisation.•The index combines two dimensions: structural change and technological catch-up.•The index is calculated for 114 countries over a long period from 1960 to 2014.•The paper elaborates a method for identifying development traps.•Countries wit...

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Bibliographic Details
Published in:World development 2018-12, Vol.112, p.59-73
Main Authors: Lavopa, Alejandro, Szirmai, Adam
Format: Article
Language:English
Subjects:
Absorption
Development traps
Empirical analysis
Employment
Escape
Income
Labor force
Mathematical analysis
Modernization
Poverty
Productivity
Structural change
Structural Modernization Landscape
Technological catch up
Technology
Technology adoption
Traps
Workforce
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Summary:•The paper presents a new index of structural modernisation.•The index combines two dimensions: structural change and technological catch-up.•The index is calculated for 114 countries over a long period from 1960 to 2014.•The paper elaborates a method for identifying development traps.•Countries with good performance on the index are the countries that have succeeded in escaping development traps. This paper explores the relationship between trajectories of structural modernisation and the ability of countries to escape poverty and middle-income traps. The analysis is based on a newly created index of structural modernisation. For each country, the index calculates the productivity gap with respect to the world frontier in activities that typically represent the modern sector of the economy, and weights this relative productivity by the employment share of those activities in the total labour force. The index is calculated for 114 countries from 1960 to 2014. A country is defined as trapped if it takes longer than a benchmark period to move from one income category to another. The analysis shows that expansion of the size of the modern sector without a process of absorption of technology for reducing the technology gap is not enough to ensure steady growth. Inversely, reducing the technology gap in just few sectors will produce an enclave economy that is doomed to stagnate.
ISSN:0305-750X
1873-5991
DOI:10.1016/j.worlddev.2018.07.005