Does structure influence growth? A panel data econometric assessment of 'relatively less developed' countries, 1979-2003

Abstract

Neo-Schumpeterian streams of research emphasize the close relationship between changes in economic structure in favor of high-skill and high-tech branches and rapid economic growth. They identify the emergence of a new technological paradigm in the 1970s, strongly based on the application of information and communication technologies (ICTs), arguing that in such periods of transition and emergence of new techno-economic paradigms, the intermediate development countries and the countries which are not at the technological frontier have higher opportunities to catch-up. Although this debate is theoretically well documented, the empirics seem to lag behind the theory. In this article, we contribute to this literature by adding enlightening evidence on the issue. More precisely, we relate the growth experiences of countries which had relatively similar economic structures in the late 1970s, with changes occurring in these countries' structures between 1979 and 2003. The results reveal a robust relationship between structure and (labor) productivity growth, and lend support to the view that producing (though not user) ICT-related industries are strategic branches of economic activity.