The conventional view of structural transformation is informed by three stylized facts of economic development: (i) all economies exhibit declining employment in agriculture, (ii) all economies exhibit a hump-shaped share of employment in industry, and (iii) all economies exhibit an increasing share of employment in services. In this paper, I show that this presumed path of structural transformation may no longer be the route to economic development in low-income economies. Classifying economies as either structurally developed, structurally developing, or structurally underdeveloped, I observe a different path of structural transformation in structurally underdeveloped economies in which workers are moving directly from agriculture to nonbusiness services, which as a sector does not have the same productivity gains as manufacturing. I also show that the mainstream approach is unable to explain the patterns of structural transformation observed in low-income developing economies. This suggests the need to rethink the theoretical premises behind much of the mainstream approach to structural transformation and to identify alternate causal mechanisms to explain the different types of structural transformation underway in the developing world.
{"title":"Structural Transformation around the World: Patterns and Drivers","authors":"K. Sen","doi":"10.1162/adev_a_00130","DOIUrl":"https://doi.org/10.1162/adev_a_00130","url":null,"abstract":"The conventional view of structural transformation is informed by three stylized facts of economic development: (i) all economies exhibit declining employment in agriculture, (ii) all economies exhibit a hump-shaped share of employment in industry, and (iii) all economies exhibit an increasing share of employment in services. In this paper, I show that this presumed path of structural transformation may no longer be the route to economic development in low-income economies. Classifying economies as either structurally developed, structurally developing, or structurally underdeveloped, I observe a different path of structural transformation in structurally underdeveloped economies in which workers are moving directly from agriculture to nonbusiness services, which as a sector does not have the same productivity gains as manufacturing. I also show that the mainstream approach is unable to explain the patterns of structural transformation observed in low-income developing economies. This suggests the need to rethink the theoretical premises behind much of the mainstream approach to structural transformation and to identify alternate causal mechanisms to explain the different types of structural transformation underway in the developing world.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_a_00130","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44955124","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mini Symposium on Perspectives on Structural Change Guest Editor: Neil Foster-McGregor Structural Transformation around the World: Patterns and Drivers Kunal Sen Structural Transformation to Manufacturing and Services: What Role for Trade? Kym Anderson and Sundar Ponnusamy From Import Substitution to Integration into Global Production Networks: The Case of the Indian Automobile Industry Prema-chandra Athukorala and C. Veeramani Global Value Chains and Employment Growth in Asia Neil Foster-McGregor Wages Over the Course of Structural Transformation: Evidence from India Rana Hasan and Rhea Molato
{"title":"Mini Symposium on Perspectives on Structural Change","authors":"J. Felipe, Neil Foster-McGregor","doi":"10.1162/adev_e_00138","DOIUrl":"https://doi.org/10.1162/adev_e_00138","url":null,"abstract":"Mini Symposium on Perspectives on Structural Change Guest Editor: Neil Foster-McGregor Structural Transformation around the World: Patterns and Drivers Kunal Sen Structural Transformation to Manufacturing and Services: What Role for Trade? Kym Anderson and Sundar Ponnusamy From Import Substitution to Integration into Global Production Networks: The Case of the Indian Automobile Industry Prema-chandra Athukorala and C. Veeramani Global Value Chains and Employment Growth in Asia Neil Foster-McGregor Wages Over the Course of Structural Transformation: Evidence from India Rana Hasan and Rhea Molato","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_e_00138","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42177076","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Erratum","authors":"Shiqiu Zhang","doi":"10.1162/adev_x_00129","DOIUrl":"https://doi.org/10.1162/adev_x_00129","url":null,"abstract":"","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43722430","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper revisits the Kuznets postulate that structural transformation will be associated with increasing inequality using comparable time series data for 32 developing and recently developed economies for the post-1950 period. We find that structural transformation in the majority of our economies has resulted in the movement of workers from agriculture to services, and not to manufacturing. Economies show different paths of structural transformation that cut across geographical regions, being either structurally underdeveloped, structurally developing, or structurally developed. We see clear differences in the structural transformation–inequality relationship depending on the stage of structural transformation that a particular economy is in, as well as across regions. We do not see a Kuznets-type relationship between manufacturing employment share and inequality when we take into account the different paths of industrialization that economies in our dataset have followed. On the other hand, inequality unambiguously increases with structural transformation if the movement of workers from agriculture is to services.
{"title":"Kuznets Revisited: What Do We Know about the Relationship between Structural Transformation and Inequality?","authors":"Çinar Baymul, K. Sen","doi":"10.1162/adev_a_00126","DOIUrl":"https://doi.org/10.1162/adev_a_00126","url":null,"abstract":"This paper revisits the Kuznets postulate that structural transformation will be associated with increasing inequality using comparable time series data for 32 developing and recently developed economies for the post-1950 period. We find that structural transformation in the majority of our economies has resulted in the movement of workers from agriculture to services, and not to manufacturing. Economies show different paths of structural transformation that cut across geographical regions, being either structurally underdeveloped, structurally developing, or structurally developed. We see clear differences in the structural transformation–inequality relationship depending on the stage of structural transformation that a particular economy is in, as well as across regions. We do not see a Kuznets-type relationship between manufacturing employment share and inequality when we take into account the different paths of industrialization that economies in our dataset have followed. On the other hand, inequality unambiguously increases with structural transformation if the movement of workers from agriculture is to services.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_a_00126","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46967155","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Tosapol Apaitan, Piti Disyatat, Krislert Samphantharak
This paper uses transaction-level data from Thailand to study concentration, specialization, and fragility of export activities. The paper shows that although exports have been an integral part of the development strategy of the country for several decades, direct engagement in international trade through exports is a rare activity. Export firms are different from their nonexport counterparts. Export activities are also extremely concentrated. There is a great deal of churning in Thai exports and exporting relationships are highly fragile. The findings highlight some cautions from a micro perspective about an export-oriented development strategy, particularly regarding concentration and vulnerability.
{"title":"Dissecting Thailand's International Trade: Evidence from 88 Million Export and Import Entries","authors":"Tosapol Apaitan, Piti Disyatat, Krislert Samphantharak","doi":"10.1162/adev_a_00122","DOIUrl":"https://doi.org/10.1162/adev_a_00122","url":null,"abstract":"This paper uses transaction-level data from Thailand to study concentration, specialization, and fragility of export activities. The paper shows that although exports have been an integral part of the development strategy of the country for several decades, direct engagement in international trade through exports is a rare activity. Export firms are different from their nonexport counterparts. Export activities are also extremely concentrated. There is a great deal of churning in Thai exports and exporting relationships are highly fragile. The findings highlight some cautions from a micro perspective about an export-oriented development strategy, particularly regarding concentration and vulnerability.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_a_00122","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48566746","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper adopts a cross-country, multisector approach to investigate the intra- and inter-industry effects of foreign direct investment (FDI) on the productivity of 15 emerging market economies in 2000 and 2008. Our main finding is that intra-industry FDI has a large positive effect on total and “exported” labor productivity. The effects of FDI on total factor productivity are much more elusive, both in statistical and economic terms. This result suggests that foreign firms raise the performance of their host economies through a direct compositional effect. Foreign firms tend to be larger and more input intensive and have greater access to foreign markets than domestic firms. Their greater prevalence mechanically increases average labor productivity and export performance.
{"title":"Foreign Direct Investment and Productivity: A Cross-Country, Multisector Analysis","authors":"Rodolphe Desbordes, Loe Franssen","doi":"10.1162/adev_a_00123","DOIUrl":"https://doi.org/10.1162/adev_a_00123","url":null,"abstract":"This paper adopts a cross-country, multisector approach to investigate the intra- and inter-industry effects of foreign direct investment (FDI) on the productivity of 15 emerging market economies in 2000 and 2008. Our main finding is that intra-industry FDI has a large positive effect on total and “exported” labor productivity. The effects of FDI on total factor productivity are much more elusive, both in statistical and economic terms. This result suggests that foreign firms raise the performance of their host economies through a direct compositional effect. Foreign firms tend to be larger and more input intensive and have greater access to foreign markets than domestic firms. Their greater prevalence mechanically increases average labor productivity and export performance.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_a_00123","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46342659","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The objective of this paper is to examine how agricultural and nonagricultural labor productivities have grown over time and whether the growth pattern affected poverty in low- and middle-income economies in Asia. We first examine whether labor productivities in the agricultural and nonagricultural sectors have converged, finding evidence that they did not as the latter have grown faster. We then confirm that both agricultural and nonagricultural labor productivities have converged across economies and that the convergence effect is stronger for the nonagricultural sector. We have also observed that, despite the relatively slower growth in agricultural labor productivity, the agricultural sector played an important role in promoting nonagricultural labor productivity and thus in nonagricultural growth. Finally, we have found some evidence that the labor productivity gap reduces rural and urban poverty, as well as national-level inequality.
{"title":"The Labor Productivity Gap between the Agricultural and Nonagricultural Sectors, and Poverty and Inequality Reduction in Asia","authors":"K. Imai, R. Gaiha, F. Bresciani","doi":"10.1162/adev_a_00125","DOIUrl":"https://doi.org/10.1162/adev_a_00125","url":null,"abstract":"The objective of this paper is to examine how agricultural and nonagricultural labor productivities have grown over time and whether the growth pattern affected poverty in low- and middle-income economies in Asia. We first examine whether labor productivities in the agricultural and nonagricultural sectors have converged, finding evidence that they did not as the latter have grown faster. We then confirm that both agricultural and nonagricultural labor productivities have converged across economies and that the convergence effect is stronger for the nonagricultural sector. We have also observed that, despite the relatively slower growth in agricultural labor productivity, the agricultural sector played an important role in promoting nonagricultural labor productivity and thus in nonagricultural growth. Finally, we have found some evidence that the labor productivity gap reduces rural and urban poverty, as well as national-level inequality.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_a_00125","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48120036","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We reexamine the economic returns to education in the People's Republic of China (PRC) using data from the Chinese General Social Survey 2010. We find that the conventional ordinary least squares estimate of wage returns to schooling is 7.8%, while the instrumental variable estimate is 20.9%. The gains from schooling rise sharply with higher levels of education. The estimated returns are 12.2% in urban provinces and 10.7% in coastal provinces, higher than in rural and inland areas. In addition, the wage premium for workers with good English skills (speaking and listening) is 30%. These results are robust to controls for height, body mass index, and English language skills, and to corrections for sample selection bias. Our findings, together with a critical review of existing studies, confirm the growing significance of human capital as a determinant of labor market performance in postreform PRC.
{"title":"Labor Market Returns to Education and English Language Skills in the People's Republic of China: An Update","authors":"M. Asadullah, Saizi Xiao","doi":"10.1162/adev_a_00124","DOIUrl":"https://doi.org/10.1162/adev_a_00124","url":null,"abstract":"We reexamine the economic returns to education in the People's Republic of China (PRC) using data from the Chinese General Social Survey 2010. We find that the conventional ordinary least squares estimate of wage returns to schooling is 7.8%, while the instrumental variable estimate is 20.9%. The gains from schooling rise sharply with higher levels of education. The estimated returns are 12.2% in urban provinces and 10.7% in coastal provinces, higher than in rural and inland areas. In addition, the wage premium for workers with good English skills (speaking and listening) is 30%. These results are robust to controls for height, body mass index, and English language skills, and to corrections for sample selection bias. Our findings, together with a critical review of existing studies, confirm the growing significance of human capital as a determinant of labor market performance in postreform PRC.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_a_00124","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47311340","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In response to the global financial crisis and subsequent Great Recession, central banks embarked on a variety of unconventional measures. Among others, credit policy has been widely employed in many advanced economies. However, credit policy is far less understood than unconventional monetary policy by both policy makers and academic scholars. This paper sheds new light on what credit policy is, how it differs from other central bank policies, and what its risks and limitations might be. In particular, I examine whether credit policy has been effective in stimulating the real economy in the Republic of Korea.
{"title":"The Effectiveness of Credit Policy: Evidence from the Republic of Korea","authors":"Jiho Lee","doi":"10.1162/adev_a_00128","DOIUrl":"https://doi.org/10.1162/adev_a_00128","url":null,"abstract":"In response to the global financial crisis and subsequent Great Recession, central banks embarked on a variety of unconventional measures. Among others, credit policy has been widely employed in many advanced economies. However, credit policy is far less understood than unconventional monetary policy by both policy makers and academic scholars. This paper sheds new light on what credit policy is, how it differs from other central bank policies, and what its risks and limitations might be. In particular, I examine whether credit policy has been effective in stimulating the real economy in the Republic of Korea.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41617921","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Slums are central to the global debate on inequality, serving as entry points for people moving to cities in search of economic opportunity. Yet we know little about the extent of intergenerational mobility in slums due to a lack of data tracking families across generations (including family members who no longer live together), as well as a lack of data covering slums. This paper addresses these empirical challenges using a field survey of four slums in Jakarta, tracking educational mobility spanning three generations: grandparents, parents, and children. Among grandparents who have less than primary education, only 24% of their children achieve junior secondary schooling or more. By contrast, among parents with less than primary education, 69% of their children attain junior secondary schooling or more. Overall, the patterns suggest improvements in educational mobility across generations. Moreover, there is suggestive evidence that groups with high educational mobility also exhibit high occupational mobility.
{"title":"Intergenerational Mobility in Slums: Evidence from a Field Survey in Jakarta","authors":"Maisy Wong","doi":"10.1162/adev_a_00121","DOIUrl":"https://doi.org/10.1162/adev_a_00121","url":null,"abstract":"Slums are central to the global debate on inequality, serving as entry points for people moving to cities in search of economic opportunity. Yet we know little about the extent of intergenerational mobility in slums due to a lack of data tracking families across generations (including family members who no longer live together), as well as a lack of data covering slums. This paper addresses these empirical challenges using a field survey of four slums in Jakarta, tracking educational mobility spanning three generations: grandparents, parents, and children. Among grandparents who have less than primary education, only 24% of their children achieve junior secondary schooling or more. By contrast, among parents with less than primary education, 69% of their children attain junior secondary schooling or more. Overall, the patterns suggest improvements in educational mobility across generations. Moreover, there is suggestive evidence that groups with high educational mobility also exhibit high occupational mobility.","PeriodicalId":39852,"journal":{"name":"Asian Development Review","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1162/adev_a_00121","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46455594","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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