Structural change and economic progress: Empirical evidence from selected Asian countries

Abstract

The academic and policy interests in the process of structural change and its inter-connectedness with economic progress have re-emerged in recent years especially after the degeneration of so-called Washington Consensus. In order to contribute to the growing body of knowledge by means of empirical analysis based on sectoral employment and output data, this paper investigates the relationship between structural change and economic progress in case of 11 selected Asian countries which were low income countries at the beginning of the study period that ranges from 1991 to 2014. By application of Shift-share technique we find that Armenia, China, and Vietnam have experienced more structural change than other countries while Tajikistan, Pakistan, and Kyrgyzistan are lagging behind. By application of panel estimation techniques we offer further evidence that structural change measured as labor relocation (by application of Shift-share technique) is a statistically significant determinant of economic progress. Our findings also confirm that capital per worker, domestic credit to private sector, and trade openness ceteris paribus also positively influence the economic progress, though with different intensities. From policy perspective, labor relocation may be facilitated by promotion of appropriate skilling opportunities for migration across sectors.