Sectoral Dynamics

Abstract

The general pattern of structural change in relation to GDP per capita (using panel data) shows a decline of agriculture and a huge increase in services. Initially the shares of industry and manufacturing in GDP and employment increase, followed by a decline. But there are interesting differences between countries, both in terms of levels and in terms of the timing of the turning point. This chapter revisits the debates on structural change in the tradition of Chenery and his associates. It examines the findings of Chenery in the light of more recent data. By and large it finds that the conclusions of Chenery stand the test of time. Subsequently, the chapter goes on to examine patterns of structural change within manufacturing, and finds important differences between sectors. Some sectors conform to the general U-curve, but other—high-tech—sectors buck the trend. Their shares of employment continue to expand even at higher levels of per capita income.