| Abstract: |
In this study, we seek to understand the patterns of structural change, labor
productivity growth and convergence in BRIC countries. In the first part, we
employ the dataset of labor productivity from de Vries et al. (2012) and the
Groningen Growth and Development Center (2013) and utilize the shift and share
analysis to investigate the contribution of within shift, static shift and
dynamic shift effects on growth of labor productivity. In the second part, we
use the convergence tests to check for the cross-country convergence in each
economic sector. Our aggregate shift-share decomposition results report that
labor productivity growth within sector itself is the main source of aggregate
growth, while an effect of labor movement exists (shift effect) but not
substantial. Among BRIC, we found that, during 1980-2008, China had the
highest rate of labor productivity growth, following by India, Russia, and
Brazil, respectively. The results of the convergence analysis show that
service sectors in BRICs have faster catching-up rates than industrial
sectors, and there is no convergence in agriculture. Among service sectors,
financial, insurance, and real estate sector has highest speed of convergence.
The BRICs results are then used to compare with the four OECD countriesf
results. It is found that in OECD countries, the sectors that converge fastest
are mining and finance, insurance, and real estate. Nevertheless, the
magnitudes of speed of convergence in OECDs are not comparable to BRICs. This
confirms the growth theory in that less developed countries converge faster
than developed nations. In sum, our findings imply that service sectors are
the driving force of economic growth and economic convergence in BRICs. |