Does structure influence growth? A panel data econometric assessment of ‘relatively less developed’ countries, 1979-2003

Abstract

Neo-Schumpeterian streams of research emphasize the close relationship between changes in economic structure in favour of high-skill and high-tech branches and rapid economic growth. They identify the emergence of a new technological paradigm, strongly based on the application of information and communication technologies (ICTs), in the 1970s, arguing that in such periods of transition and emergence of new techno-economic paradigms the relatively less developed countries have higher opportunities to catch-up. Although this debate is theoretically well documented, the empirics seem to lag behind the theory. In this paper, we contribute to this literature by adding illuminating evidence on the issue. More precisely, we relate the growth experiences of countries which had relatively similar economic structures in the late 1970s, with changes occurring in these countries’ structures between 1979 and 2003. The results reveal a robust relationship between structure and (labour) productivity growth, and lend support to the view that producing (though not user) ICT-related industries are strategic branches of economic activity.Structural change, Economic growth, Technical change