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This study examines the determinants of economic growth and industrialization based on the Growth Identity Equation. This identity links total output growth with the performance of the three economic sectors (agriculture, industry and services) measured by their sectorial rates of output growth and weighted by each sector’s output share in GDP. Using the data from 164 countries from 1970 to 2010 our study examines and explains economic growth and industrialization with economic, institutional, and other variables. We identify the causal variables for industrialization that are reflected in the structural shifts of the output ratios in the three sectors.

The Empirics of Economic Growth and Industrialization Using Growth Identity Equation