Economic Development and Structural Change: The role of Services

Abstract

This work studies the structural transformation of the sectorial production shares along thedevelopment process, for a worldwide sample of both advanced and developing countries andfor the different regions with the different that compose the total sample. The study is carriedout for 39 countries during the 1960-2011 period. This explores the evolution of the structuraltransformation in the development process, and in particular the effect of the expansion ofservice sector on economic growth. First, it presents empirical evidence on an increasing shareof industrial and mainly services sectors in the growth process, as for the worldwide sample asfor different economic regions, and a hump-shaped relationship between industrial productionand income. Then, this research points out that the higher participation of industry is favorable.In turn, except the business activities, services sector is harmful for economic growth, whichconfirms the intuition stated by Rodrik (2016).