Structural Change

Abstract

Development economics appears to have come full circle, as interest in and concern for industrialization have made a comeback, echoing major concerns of the early development economists. However, when it comes to the practice of industrialization strategy and industrial policy, the default recommendation is still the market and static comparative advantage — the main task of governments, in the new view, is to impose institutional reforms and improve governance so as to allow markets to perform more efficiently. History is thus about to repeat itself, but this time as farce, because no country has managed to climb the industrial ladder just by ‘getting prices and institutions right’. We have to re‐learn the old lessons of how to industrialize, learning from past mistakes and taking into account new challenges posed by today's global realities.

The Political Economy of Industrialization

“…The main points of Lall (1993) and Wade (2014) are congruent with the argument made in the previously mentioned paper on 'Structural Change' by Servaas Storm (2015), which is also outspokenly Kaldorian in approach, emphasizing Kaldor's First and Second Empirical Laws, and which has many links with Sideri (1972), Jenkins (1991), Lawrence (2005), and Storm and Naastepad (2005). The 2015 paper should be read as a companion piece to Fischer's (2015) contribution on peripherality.…”

Food Dependency in Sub‐Saharan Africa: Simply a Matter of ‘Vulnerability’, or Missed Development Opportunity?

“…Controversies over the role of agriculture in economic development abound in the literature. The central role of a supportive (and supported) agricultural sector in the early stages of development leans heavily on the historic evidence of its contribution to a process of structural transformation (Hazell et al., ; Johnston and Mellor, ; Storm, ), both in the distant past of today's developed economies (Lewis, ) and in more recent transformations in a number of Asian economies (see, for example, Henley, ).…”

“…: 96, 99). While such arguments appear reasonable in light of SSA's agricultural potential and the lack of obvious alternatives, they put the cart before the horse, ignoring the lessons of the histories referred to above in which successful transitions involve migrations out of agriculture as modernization proceeds and as productivity in agriculture rises (see, for example, Storm, : 681). They also appear (1) to presume a priori conditions, such as economic opportunity in other sectors, that currently do not exist throughout most of SSA, and (2) to ignore the large rural‐to‐urban migrations that have taken place, as well as the current diminishing migrations apparently related to the shrinking of urban survival prospects and the rise of multi‐local livelihoods that are supplanting them (Andersson Djurfeldt, : 3; McMillan and Headey, : 5).…”

The New Normal: Demand, Secular Stagnation and the Vanishing Middle-Class

“…Assuming a "buyers' market," as all workers searching for a job must find one (in order to survive), the stagnant-sector real wage must be "market-clearing." The model thus operates as a "Lewis model in reverse" (Lewis 1954;Storm 2015). Note further that since π takes a value of about 2 (see the appendix), an increase in peripheral labor supply growth of, say, 1%, depresses peripheral real wage growth by about 2%.…”