Globalization, Structural Change and Productivity Growth in the Emerging Countries (original) (raw)

The paper examines the sources of labor reallocation or structural change, and measures and empirically evaluates the contribution of structural change to labor productivity growth (LPG). The paper also evaluates the relative contributions of human and physical capital to LPG. The paper found that changing final demand is the most crucial factor in labor reallocation in India. In the PRC, this and changes in technology are factors of labor allocation. The regression analysis confirmed that structural change, globalization, and human capital significantly contribute to LPG. Due to its prevailing structure, India is capable of leading global economic growth in the future, provided that certain necessary policies on human capital development, outward-oriented policies, and other conducive economic reform measures are taken. There is enough room for India to use manufacturing as a growth escalator, and for China to tap into services as a growth escalator to avoid the middle income trap.

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