Economic Development and Structural Change

This doctoral dissertation contributes to the understanding of structural change, often defined as the process of reallocation of economic activity and resources across the three broad sectors agriculture (primary sector), manufacturing (secondary sector) and services (tertiary sector). Increasingly connected to the study of modern growth, the analysis of structural change has known an important revival over recent decades, due in part to the economic concerns associated with the movement of deindustrialization that has particularly affected the world’s most economically successful countries since the last third of the 20th century. These concerns have indeed fed many discussions on the causes and consequences of structural change, as well as on the role of policy instruments in driving and accompanying the inter-sectoral reallocation of activity.
The first part of the thesis gets particularly interested in the driving forces behind the process of structural change. It begins by placing structural change in a very long historical perspective, notably shedding light on the factors that contributed to the emergence of the Industrial Revolution, an event characterized by the acceleration of structural change and traditionally considered as a turning point in the history of mankind because it eventually brought about modernity. It then analyzes the main causes of structural change in market economies, putting a particular emphasis on two mechanisms of structural change that have been largely overlooked in the recent multi-sector growth literature: changes in input-output (sectoral) linkages and changes in comparative advantage via globalization and trade. With respect to trade, an empirical analysis reveals that global exchanges have the potential to influence significantly and substantially a country’s sectoral patterns of employment, and that the estimated contribution of trade, especially of trade with developing countries, to recent structural change (deindustrialization) in affluent countries may be revised upwards when resorting to better-suited indicators of trade in manufactures.
The second part of this doctoral thesis deals more with the economic effects of structural change. In particular, it proposes a new shift-share method, which is an accounting method aimed at computing the impact of the economic structure - or structural change - on a territory’s economic performance. By way of illustration, it provides an application to manufacturing employment in the Belgian provinces between 1995 and 2007.