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Services in developing economies: The de-industrialization debate in perspective

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posted on 2023-06-09, 12:09 authored by Gisela Di Meglio, Jorge Gallego, Andres Maroto, Maria SavonaMaria Savona
The article adds to the debate around the ‘premature deindustrialization’ of developing countries by analyzing the contribution of services to aggregate productivity and output growth within a Kaldorian framework. We revisit Kaldor´s Growth Laws (KGL) and empirically test them for a number of economic activities, including four service branches, across twenty-nine developing economies in Asia, Latin-America and Sub-Saharan Africa over three decades (1975-2005). Panel data estimations are complemented by a shift-share decomposition of labour productivity growth. We find support to the Kaldorian argument for both manufacturing and business services contribution to aggregate productivity growth. Conversely, other services slow down aggregate productivity and output growth. We suggest qualifying and repositioning the debate on premature deindustrialization within a broader reflection on the opportunities for development linked to structural change. We claim that these opportunities might include not only manufacturing sectors but also business services.

Funding

ISIGrowth: Innovation-fuelled, Sustainable, Inclusive Growth; G1610; EUROPEAN UNION; 649186

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Development and Change

ISSN

0012-155X

Publisher

Wiley

Issue

6

Volume

49

Page range

1495-1525

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2018-02-14

First Open Access (FOA) Date

2020-08-30

First Compliant Deposit (FCD) Date

2018-02-14

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