Sources of economic growth and structural change: A revised approach

Abstract

In this paper we have developed a revised approach to analyze the sources of economic growth and structural change under an interindustry framework, with the key features of obtaining cross-terms separated from the combined source effects, which are derived from the Paasche approach as well as the Laspeyres approach. In comparison with the approaches based on the specific parameters and variables chosen, it is shown that some of the terms in the Chenery and Lewis-Soligo approaches are biased. Mainly because they absorb their own related cross-terms. these cross-terms play a relatively important role in explaining economic growth and structural change in the industrialization process, both theoretically and empirically, and should be presented independently. Furthermore, this approach solves the confusing problem of selecting periods as a reference. In addition, this paper also distinguishes the relationship and difference between the effects of economic growth and structural change.