This paper explores the relationship between trajectories of structural modernisation and the ability of countries to escape poverty and middle-income traps. The analysis is based on a newly created index of structural modernisation. For each country, the index calculates the productivity gap with respect to the world frontier in activities that typically represent the modern sector of the economy, and weights this relative productivity by the employment share of those activities in the total labour force. The index is calculated for 114 countries from 1960 to 2014. A country is defined as trapped if it takes longer than a benchmark period to move from one income category to another. The analysis shows that expansion of the size of the modern sector without a process of absorption of technology for reducing the technology gap is not enough to ensure steady growth. Inversely, reducing the technology gap in just few sectors will produce an enclave economy that is doomed to stagnate.
- o00 - Economic Development, Technological Change, and Growth
- o30 - "Technological Change; Research and Development; Intellectual Property Rights: General"
- o15 - "Economic Development: Human Resources; Human Development; Income Distribution; Migration"
- l16 - "Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices"
- j21 - Labor Force and Employment, Size, and Structure
- Development traps
- Structural change
- Structural Modernization Landscape
- Technological catch up
- economic development
- economic structure
- income distribution
- labor supply
- structural adjustment
- structural change
- technology adoption
- POVERTY TRAPS
- PRODUCTIVITY GROWTH