Endogenous structural change

Author

Taoufik Rajhi

Abstract

We presents a model of endogenous structural change in the line with the endogenous growth literature of Romer [1987, 1990] and the mechanism of structural change of Matsuyama [1992]. The model generates in an endogenous way a fall in agricultural employment and growth of industrial employment drawn by Research and Development activity (R&D) as determinant of economic growth . The main mechanism behind this process is endogenous technical progress and overall externality effects generated by the increase of innovation used in the production of intermediate and industrial goods sectors. The more the economy produces in an innovative way, the more the number of goods produced by the industrial sector increases and the more we see productivity increase in the agricultural sector. This mechanism of productivity aid to release labor of the two sectors towards the R&D sector which in turn increases innovation( Rodrik [2013b]). It is a virtuous cycle of sustainable and endogenous structural change. An exploitation of new datasets makes it possible to better determine the dynamic process of structural change in relation to economic development. The analysis is carried out by specifying the characteristics of the structural change in five different groups of countries : countries with High income, Asian, Latin America and Sub-Saharan Africa.

Integrating Africa’s Workforce

If African countries are to transform structurally and integrate regionally, African workers and talents must be able to explore job opportunities and skills transfer across industries and across borders.

Read the Chief Economist's Blog

Conference Venue

United Nations Conference Centre, Addis Ababa

AEC Partners