PRODUCTIVITY AND STRUCTURAL CHANGE A REVIEW OF THE LITERATURE.pdfVIP

PRODUCTIVITY AND STRUCTURAL CHANGE: A REVIEW OF THE LITERATURE Jens J. Kr¨uger Friedrich-Schiller-University Abstract. This paper is a survey of the existing research on structural change at various levels of aggregation with a special focus on the relation to productivity and technological change. The exposition covers the research concerning the development of the three main sectors of the private economy, multisector growth models and recent evolutionary theories of structural change. Empirical studies of the reallocation of market or sector shares as a result of differential productivity developments are also discussed. The synthesis emphasizes the crucial interaction of supply- and demand-side forces in shaping structural change. Keywords. Structural change; Productivity growth; Industrialization 1. Introduction Structural change is understood in the work surveyed in this paper as ‘long-term changes in the composition of economic aggregates’ as defined by the Austrian economist Erich Streissler (Streissler, 1982, p. 2; author’s translation). Two aspects of this definition are important. First, structural change is associated with changes that affect disaggregate units. These changes are generally of different magnitude for each single unit, since otherwise the composition of the aggregate would not change. Second, these differential changes are relevant in the long run, making structural change an important aspect of economic growth. Taken together, structural change in the economy implies that some industries or sectors experience faster long-term growth than others, leading to shifts of the shares of these industries or sectors in the total aggregate. A very important contributor to our knowledge about structural change and its driving forces is Simon Kuz