Growth accounting exercises point to aggregate TFP dierences as the dominant source of the large cross-country income dierences. In this paper, I
ask which sectors account for the aggregate TFP gap between rich and poor
countries. Data limitations for developing countries have led researchers to
use indirect methods for estimating sectoral TFPs. This paper proposes a new
approach for estimating sectoral TFP using panel data on sectoral employment shares and GDP per capita. The approach builds a model of structural
transformation and uses it to infer sectoral TFP time series consistent with
the reallocation of labor between sectors and GDP per capita growth of a
set of developing countries over a 40-year period. I nd that relative to the
US, developing countries are the least productive in agriculture, followed by
services and then manufacturing. While these ndings are consistent with
empirical studies, they dier from ndings in the growth literature
