Structural change and growth: An evolutionary interpretation

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Federico Riccio (Scuola Superiore Sant’Anna, Pisa)

In the realm of economic analysis, understanding the dynamics of structural change is crucial for fostering sustainable growth. The articles explore the intricate relationship between structural change and its impact on economic growth focussing respectively on sectoral patterns of deindustrialisation and export specialisation patterns.

Contrary to prevailing notions, the first article’s cross-country analysis challenges the idea of a natural tendency towards deindustrialization. It reveals diverse deindustrialization patterns, highlighting sectoral heterogeneity. The Pavitt (1984) taxonomy categorizes industrial sectors, unveiling an uneven deindustrialization process. Sectors like Science-Based and Specialized Suppliers defy expected patterns in employment and value added. This sectoral diversity extends across Pavitt aggregates and industry levels. The study also probes sectoral composition’s influence on deindustrialization timing. It underscores the distinct impact of technological shifts and the complexity of economic development trajectories. Globalization’s era heightens the risk for low-income countries, emphasizing the need for growth-promoting structural change strategies.

How to achieve a growth promoting structural change through an efficient specialisation strategy is a challenge addressed by the second article. It counters the notion of inevitability and stresses policy interventions centered on innovation and investment. 

First, we introduce two innovative indicators, capturing specialization quality. The Keynesian efficiency index gauges demand attractiveness, considering demand elasticities and diversification. The Schumpeterian efficiency index gauges technological dynamism through patent intensities. Then, we show that these specialization’s attributes—demand responsiveness and technological innovation— are able to spur growth. 

These interconnected articles offer a nuanced narrative recognizing the intricate relationship between structural change and economic growth. They emphasize diverse deindustrialization patterns and strategies for balanced specialization, underscoring a holistic approach to managing structural change for enduring prosperity.