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Balanced versus unbalanced growth: Revisiting the forgotten debate with new empirics
Author(s) -
Jiang Xiao,
CaraballoCueto Jose,
Nguyen Chau
Publication year - 2020
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12688
Subject(s) - economics , panel data , econometrics , per capita , macroeconomics , work (physics) , per capita income , value (mathematics) , construct (python library) , set (abstract data type) , sociology , statistics , mechanical engineering , population , demography , mathematics , computer science , engineering , programming language
The debate between balanced and unbalanced growth doctrines generated much heat after the publication of Rosenstein‐Rodan’s seminal work in 1943, but it vanished in the early 1980s. This paper empirically revisits this forgotten debate by first compiling a harmonized international data set that contains sectoral value‐added data for up to 177 countries over 45 years. This data set enables us to construct indices of sectoral growth imbalances for each country, which further allows us to update the key empirical tests for the balanced and unbalanced growth hypotheses that featured in the original debate. Moreover, we also conduct a panel regression analysis to systematically examine the association between sectoral balance (or imbalance) and per capita income growth. Overall, we find empirical support for the balanced growth hypothesis.