Structural Transformation and Development Experience from Asian Countries

Abstract

AbstractStructural transformation is one of the critical drivers of growth and development worldwide. In all countries that achieved development success, agriculture’s share of output and employment declined as industry’s share grew, followed by ‘deindustrialization,’ as services became dominant. Also, we observed productivity upgrading from low to high within each of the three sectors. Asia achieved structural transformation at a much faster speed than other developed regions partly because of the continuous deterioration of agricultural terms of trade. At the same time, the manufacturing industry drives Asia’s rapid growth because it has a number of essential features, such as a large scope for innovation and technological progress, scale economies, and the creation of better-paying jobs for a broad population. Yet, a few countries in Asia, such as the Philippines, face a critical question: can industrialization be bypassed for development? This chapter approaches these trends and issues by looking at aggregate statistics and long household panel data to discuss the Asian type of ‘canonical industrialization’ and ‘premature deindustrialization