Another U-curve in economic development

During the course of research my co-author Maggie McMillan and I were doing on broad patterns of structural change, our research assistant Inigo Verduzco stumbled on an interesting stylized fact that is captured in the figure below.

What it shows is that the relative productivity of agriculture exhibits a U-shaped pattern over the course of development. It first falls and then rises, as countries get richer. (By productivity, I am referring to labor productivity.)

You can see the same pattern within countries as well. Here is a chart that collates the trends in three countries at different levels of development: India, Peru, and France:

In India, which is the poorest country, as overall productivity has increased, the productivity of agriculture (relative to other activities in the economy) has come down steadily. In France, the richest country, agricultural productivity has converged with that of the rest of the economy. In Peru, which is somewhere in between, the relative productivity of agriculture has fluctuated around the minimum point of the U-curve.

What these results point to are two critical dynamics that take place during the course of development. First, you need some new, high-productivity activities to emerge in order for development to happen. These typically arise outside of agriculture. So as these new activities propel the economy forward, agriculture falls behind in terms of relative productivity. Second, labor tends to move from low- to high-productivity activities as an economy gets richer. This tends to reduce the gap between productivity in agriculture and non-agriculture (think of diminishing marginal returns). At some point, the second dynamic overwhelms the first, and the curve begins to slope outward.

Lesson: economic development requires both new activities (diversification) and ongoing transfer of resources from traditional to modern activities. Some countries are stuck with no new industries, so they never grow. Others get a few new industries (e.g. mining and other natural resource-based industries), but these do not expand sufficiently and absorb much labor, so development gets stuck at an intermediate level of income. The real successful countries are those that pull off both tricks.

Comments

[Account Deleted]

They are really the the actual best and chic snazzy add-ons developed right now. There aren't particularly many design thomas sabo shop which may acquire the best for these charisma concerned with conviction charms.
http://www.thethomasonline.com/

[Account Deleted]

Nice article, thanks for the information.
rental elf

[Ealhussainy]

Interesting piece. What is the source of the productivity data time series?

[Account Deleted]

What is the evolution of absolute labor productivity of agriculture ? Does it rises, lower or stay put in the lower stages of development ? If the later case, the fact being stated is that agricultural productivity is not affected by development before a certain stage is reached - maybe until rural exodus is strong enough that rural population actually goes down ?

[Youcef Msaid]

Some of the pattern might be mechanically driven by demographic transition. High population growth at first that washes out productivity gains and the transition kicks in at some point.
Very interesting, in any case!

[Hal Neufmille]

@Antonin Lucas: Assuming that the technology doesn't change in earlier stages of development (and exhibits decreasing returns to labor input), productivity should rise because fewer workers exploit the same amount of land.

[procommunity]

Interesting patterns. I agree with the practical conclusions that economies need to diversity into new industries and also allow labor to move into the more productive industries.

Governments should assist by devising practical ways of easing the pain of moving from a rural to an urban lifestyle, or from a lifelong occupation into another one.

[Paul Swinney]

It would be interesting to see if a similar relationship holds between manufacturing and services, particularly at a city level within a developed country. It could explain the divergence of performance within a country.

[Magi Lego]

מתנה היא דבר שנותנים למי שמביאים חיבה אליו, מתנות הן דרך נהדרת להראות למישהו שאכפת לך ממנו תוך מתן של חפץ מוחשי שיחשב למתנה

בזה שריגש את היולדת, ברגש שיעניק וימחיש את צומת הלב שאתם נותנים למי שאתם אוהבים ומעריכים. לאחר הלידה האם זקוקה נמרצות לכל צומת לב

שהיא יכולה לקבל וזאת כדי לתת לה ולהמחיש לה מעשית את האהבה אלייה וכך לתת לה מוטיבציה לתת ולטפל בתינוקה (בשי שקבלה) באופן הטוב

ביותר, לפעמים מתנה נחמדה ליולדת יכולה להסב אושר ליולדת הטרייה ולתת לה כוח, לה ולילדה התינוק הטרי. מתנה ליולדת היא דבר נהדר שחובה

לקנות ולהעניק לכל אם טרייה, לה ולילד הרך, כדי להראות חום ואהבה שיעזרו לה רגשית ונפשית לטפל בילד שלה במסירות ויתנו לה את הכלים ואת

המוטיבציה לאהוב את התינוק שלה, להשקיע בו ולהבין שתינוק הוא פשוט מתנה, מתנה שאלוהים נתן ליולדת. כשיולדת מקבלת מתנה היא מבינה כמה

הערכה יש אלייה ולתינוק שלה ועם ההערכה הזאת מגיע גם הזיקה לתינוק וכל כאב וסבל ההריון נשכח כאילו לא היה ופירותיו האמיתיים של ההריון

(המתנה שקיבלה האם הטרייה מבורא עולם שהיא מבין המתנות הגדולות ביותר שאי פעם קיבלה ותקבל) מתחילים להיראות ולהתגלות בתקופה מקסימה של האם היולדת והשי שקבלה, התינוק היפייפה שלה. חשוב מאוד להשקיע בשי קטן וצנוע או מתנה קטנה שתביע את הרגישות ותוכיח הערכה ותמיכה כלפי היולדת כדי להכניס בה את הכוכות לגדל את המתנה שלה על הצד הטוב ביותר. מתנות ליולדת הם לא דבר יקר ומתאימות לכל כיס ובלי קשר לזאת כל וכלל צריך וחשוב להעניק מתנות לרגל הלידה ובכך לדעת שהשפעתם ונתתם חלק גדול בשלבי ההתפתחות של הולד הטרי ולקריירת ההתפתחות של היולדת הטרייה שזה עתה ילדה טת פרי ביטנה וצריכה לדאוג לו, לטפח אותו ולהשקיע בו ולזכור תמיד שהוא המתנה הגדולה ביותר שהיא קיבלה. אנחנו, בני המשפחה צריכים להעניק לה (ליולדת) שלל מתנות מושקעות ומביעות אהבה בדיוק כמו המתנה שהיולדת מקבלת בלידה של התינוק שלה.
היכנסו לאתרנו כדי לבחור את המתנה המושלמת לאישה הקורבה לכם, לאמא שאתם אוהבים http://www.babyle.co.il

[Account Deleted]

@Hal : Well, maybe what this shows is that the number of agricultural workers doesn't decrease all that much during the early stage of development, and it is the surplus population of the demographic transition that is moving to the cities. Also, in non-modernised agricultural system, land productivity decreases when less labour is applied, rather than being constant.

[Account Deleted]

raf sistemleri

Thanks so much.

[Account Deleted]

http://www.mbtfootwearusa.com/

[Account Deleted]

One of polo shirts for men the primary concerns as soon as it comes to article translation is loyalty and privacy. As one will provide several documents they might have polo shirts wholesale sensitive or classified info concerning your business, and there is a great polo ralph lauren sweater deal of risk that it may leak out. http://wholesale-polos.com/

[Bizproject Bizproject]

בניית אתרים
ברמה מקצועית יש רק ב2all שהיא החברה הגדולה והמקצועית ביותר בתחום בניית האתרים הארץ, בוני האתרים שלנו בונים אתרים ברמה גבוה מאוד, הם הוכשרו בבתי ספר מיוחדים לבניית אתרים
שבו מרצים על בניית אתרים בוני אתרים מקצועיים המנוסים מזה שנים בתחום האינטרנט והרשת

[Account Deleted]

sumomaxObesity is a health problem that is obesity. An important problem in both developed and developing countries in particular. Attenuation of the methods and products for the more popular, while the minority part of the problem concerning the weakness of not showing enough effort.

Fried foods, pastries, sweet foods such as calorie consumption can not lose weight in a healthy manner. Essential nutrients our bodies need to take as needed.

[Account Deleted]

Thanks for your opinion. I totally agree with it.I like buy cheap designer handbags at http://www.mybestbags.com as well and someone is looking for cheap coach handbags

[Seoyoon_yang]

This is an amazing piece. It is such a helpful input for my thesis! Thank you!

[Account Deleted]

Thanks.

[Account Deleted]

Quickest way to lose weight:-
www.tinyurl.com/way23

[Account Deleted]

Thank you for sharing,It's so lucky to read your site,it is full of helpful message.I want we both can do much better in the future.It fantastic honour if you can go to our website,and present us some suggession.Thanks to the person who chose to make this post, this was extremely informative for me. You should continue this great work.The materials that pandora uk cause silver tarnishing include eggs, rubber bands, wood, onions, etc. so, the fact remains that avoiding pandora bracelets

[Account Deleted]

Nice post.Thank you for taking the time to publish this information very useful!
http://www.volumerates.com/

[Account Deleted]

http://www.rolexparty.com/

sdfsdfsdfsd

[Tabletpcunion]

Really good post. I love it. THANKS FOR SHARING.
android tablet

[Account Deleted]

Feito pelo facebook do(a) hipersexshop

[Account Deleted]

Many places and centers offer business and trade promotions to both buyers and supplier.What about the differences in skill intensities across industries? The job losses in the relatively unskilled-labor intensive battery industry should have little effect on the relatively skilled-labor intensive machinery
sexshop
sexyshop
sexshop online
alongador peniano

[Account Deleted]

Good food for thought here. Thank you very much for the extensive explanation. Very nicely written. Really makes think. russische frauen

[Lena Kong]

British fashion designer Alexander McQueen, who committed suicide in February last year, left £50,000 of his £16 million fortune to his beloved pet dogs, details of his http://www.christianlouboutin70off.com/

[Account Deleted]

water removal http://www.restorationsos.com The Most Helpful Restoration Service in America - Affordable Services in Your Area - 24/7 Hotline.

[Account Deleted]

water removal http://www.restorationsos.com The Most Helpful Restoration Service in America - Affordable Services in Your Area - 24/7 Hotline.

[slrlense01]

you are really smart.. and expert using graphic.

http://bestpregnancyblogs.com
http://bestpregnancyblogs.com/dha-during-pregnancy/

[Kilymom]

Canada Goose

Though celebrities come from many different working fields and facets of everyday life, most celebrities are typically associated with individuals that come from the fields of sports and entertainment or a person who is a public figure in that is commonly recognizable in mass media.

[Account Deleted]

Pretty good post. I just stumbled upon your blog and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be subscribing to your feed now.
http://bit.ly/sowlZC

[Lifenzhu]

Joseph enlisted his three sons and they began practising with the instrument and giving concerts locally. Having gained support and acclaim in the Keswick region, they set off on a three-week tour of the major northern towns of England. Their reception and immediate success meant that they did not see their home again for three years. One local newspaper noted that "everyone appeared much delighted with the sweet sound elicited from the rugged and uncouth looking and unique instrument". Their success encouraged them to head for London, where "the wonderful merits of your admirable instrument cannot fail to be well-received by the London public who are very musical people".
http://bit.ly/ubAjYJ

[Lily Yago]

Your writing skills are really emaculate, I wish I was half as good as you.

Nike free run sale http://nikefreerunsaler.net, Nike free run 2.

[Account Deleted]

You have many usefull post, glad to reader your write.

Betwin188.com Agen Bola Terbaik Dukung Anti Rasisme EURO 2012

Iklan Internet Murah Efektif Berkualitas Indonesia

Motor Matic Injeksi Irit Harga Murah – Yamaha Mio J

[Account Deleted]

This is such a great idea! I'm going to try to do this. Yes! As always, your pictures are beautiful.
Friend Link: http://www.shoestyleonline.com

[Account Deleted]

Your writers are enormously tremendous.

unsecured loans online

[Graham Goch]

I am surely coming again for more contents of yours.

http://www.bestratedbadcreditloans.com/

[Jerry John]

People are looking forward to the 2010 World Expo in Shanghai, like links of london jewelry, to us, to show the world the beauty of its beauty! moving to london

[Rastia Rigie]

Bank Mandiri Bank Terbaik di Indonesia
Bank Mandiri Bank Terbaik di Indonesia
Promo Bonus 100% Sbobet, Ibcbet dan Casino Online Dalam Rangka HUT BAVETLINE Yang Kedua
Masterbet88 Grand Opening Promo Bonus 50% Sportsbook dan Casino Online

[Happy Adapter]

Acer Aspire 3000 ac adapter

[Happy Adapter]

laptop ac adapter

[Happy Adapter]

Dell Laptop AC Adapters Dell Laptop AC Adapters

[Kinsell Emma]

Good post，thank you for sharing.
Ultrabook Parts|AU AC Adapters|Global AC Adapter|Ersatz Laptop Akkus

[Okadapter]

laptop ac adapter
Compaq Laptop AC Adapters
HP Laptop AC Adapters
Dell Laptop AC Adapters