Publication Date: August 2020
Industrialization experiences diﬀer signiﬁcantly across countries. We use a benchmark model of structural change to shed light on the sources of this heterogeneity and, in particular, the phenomenon of premature deindustrialization. Our analysis leads to three key ﬁndings. First, benchmark models of structural change robustly generate hump-shaped patterns for the evolution of the manufacturing sector. Second, heterogeneous patterns of catch-up in sectoral productivities across countries can generate variation in industrialization experiences similar to those found in the data, including premature deindustrialization. Third, diﬀerences in the rate of agricultural productivity growth across economies can account for a large share of the variation in peak manufacturing employment shares.
Keywords: Structural transformation, Productivity growth, Industrialization
JEL Classification Codes: E24, O11, O13, O14, O33, O41