Abstract
This paper identifies the factors that influence percentage contribution of sectors to gross domestic product (GDP) for a group of 32 Asian countries for two cross-section points 1994-96 and 2014-16. Development theories hypothesize that the percentage share of sectors to GDP undergoes transformation with the level of economic development of the country and the degree of competitiveness of its agricultural sector. This paper employed the use of a canonical correlation analysis for 32 Asian countries. This analysis shows that the structural changes in sectoral GDP composition in the selected Asian countries were significantly determined by the factors like employee productivity, employment growth in services sector, rising life expectancy, growth of value added in manufacturing and gross capital formation.
Highlights
Economic development and structural changes in gross domestic product (GDP) are inter-related
This analysis shows that the structural changes in sectoral GDP composition in the selected Asian countries were significantly determined by the factors like employee productivity, employment growth in services sector, rising life expectancy, growth of value added in manufacturing and gross capital formation
The highest coefficient of variation is observed for the share of agriculture in GDP (61.68%) followed by the share of industry (29.37%) and the least for the services (25.53%) for 1994-96
Summary
Economic development and structural changes in GDP are inter-related. We can see a number of studies related to how the agricultural development is determined by various factors like rural population, life expectancy, foreign direct investment, level of agricultural exports etc. There are studies explaining the growth of service sector in terms of urbanization and per capita income. Growth of industrial sector is explained in terms of capital formation, foreign direct investment, exports etc. Separate studies on agriculture or industry or services sector are based mainly on multiple regression analysis and excluded the effects of development indicators on the structural changes in the composition of GDP. This study is based on canonical correlation analysis which is a generalization of multiple regression.
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