GLOBALIZATION, STRUCTURAL CHANGE, AND PRODUCTIVITY GROWTH BY MCMILLAN AND RODRIK. Comments: Bill Maloney

Transcription

1 GLOBALIZATION, STRUCTURAL CHANGE, AND PRODUCTIVITY GROWTH BY MCMILLAN AND RODRIK Comments: Bill Maloney

2 What are we measuring? In a competitive context w/o distortions, labor productivity driven by K/L where K could be Physical capital Knowledge capital (in TFP) Natural resources (Natural capital) Human capital There should be differentials between industries of different K intensity (at given factor prices) eq dispersion depends on technologies, endowments

3 What is structural change here? Competitive: With K accumulation, reallocate toward more K-intensive goods: Rybczynski Dualistic: Agriculture to Manufacturing Structural Change is welfare improving and progrowth.

4 Mystery Three sets of countries that show negative structural change. Africa Latin America Singapore and S. Korea? What is responsible for this? Raw materials/exports Exchange rate undervaluation Employment rigidity Initial share in agriculture

5 Productivity in My Hood: LAC Productivity higher when Tariffs and Monopoly power raise final goods prices- (e.g. Telmex) Unless there are externalities, shifting towards such high productivity sectors Allocates resources suboptimally and does not increase overall welfare Does not promote growth

6 Chile- the case study in premature deindustrialization you must do Pre reform: had as many automotive assembly plants as the US!!!!! ERP obscene by global standards (Jeanneret 1972) Chile 100 to 650 Brazil 50 to 500 Malaysia 25 to 200 Norway 17 to /21 industries studied could export only at a loss : wood, paper, paper products, fish, and [noncopper] minerals. Exports of fruit, seafood, oils, wine lagging

7 After reforms in LA The question left unanswered is what happens to the workers who are thereby displaced? rationalization of manufacturing industries may have come at the expense of inducing growthreducing structural change.

8 Mystery What is responsible for this? Raw materials/exports Exchange rate undervaluation Employment rigidity Initial share in agriculture

9 Natural resources Conceptually Monster rents- makes NRs so excellent and high productivity-but don t employ many people What would diversification cum increased labor force participation/expansion do? Probably the wrong measure Net Resource Exports/Labor a better measure of Comparative advantage (Leamer) NR exports/exports is a measure of concentration Also confuses entrepots like..

10 Singapore the culprit? CHN Growth GDP (Annual ) THA IRL HKG IND LKA EGY PAK JPN ESP NPL TUR USA GBR FIN AUS ISR TUN ITAUT FRA DNK SWE GRC CAN COLHUN URY CHE MEX ZWE SLV BRA JAM SEN ARG PHL KEN GTMMLI PRY PER JOR ZAF MUS IDN NLD CRI NZL SYR CHL NOR HND BOL CMR MWI DZA ECU MYS TTO PNG SGP COG TGO NIC NRX/GDP (Average ) Lederman and Maloney (2007)

11 Undervaluation Conceptually: Maintaining a below eq ER over the medium term Subsidy to exporters/tradeables, tax on others (consumers) Only optimal if there are externalities (see for example Korinek and Serven 2011) Practically, are you measuring These externalities? The massive overvaluations in LAC during Stabilization cum Liberalization? The lessons are radically different

12 Initial share in ag? Why not initial dispersion? 0.16 Coef. Of Variation of log of sectoral productivity 0.14 VEN BRA COL BOL PHL MEX CRI ARG THA MYS IDN KOR PER TWN HKG IND CHL SGP CHN Compound Annual Growth Rate of Econ. Wide Productivity

13 More focus on within industry margin? M and R note that Singapore and Korea had high growth within industries so offset negative reallocation effect. Why doesn t this happen LAC? Singapore: Young (1992), Fernald and Neiman (2011). In favored sectors technology grew less. Singapore achieve less with more Lots of K, not much TFP Eastern Europe: within industry margin is only real margin to exploit (Caselli and Tenreyo 2005) Low growth in service sector productivity causes LAC lag (Silva and Ferreira 2010) Schott (2004)- within differences in export quality within HS10 categories huge.

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15 0.16 Coef. Of Variation of log of sectoral productivity BOL THA CHN BRA IDN COL PER PHL IND VEN CRI MEX CHL ARG MYS KOR TWN SGP HKG Economy-wide Labor Productivity

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