Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283760 
Year of Publication: 
2023
Series/Report no.: 
WIDER Working Paper No. 2023/64
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
How does international trade affect structural transformation in developing countries? We use data on sectoral allocation of labour and value-added in 46 developing economies over the period 1995-2017 and exploit for identification plausibly exogenous variation in manufacturing imports from China. We find that the so-called 'China shock' largely slows down the transformation of low- and middle-income economies out of agriculture. In our main specification industrialization decreases by 0.49 per cent on average for each additional per cent of manufacturing imports from China. It highlights a competition effect where exposure to Chinese imports is largely detrimental to structural transformation. These results hold across geographical regions, with a difference in Sub-Saharan Africa, where international trade causes an increase in the size of the services sector.
Subjects: 
developing economies
industrialization
structural transformation
trade
JEL: 
F14
F63
O11
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-372-7
Document Type: 
Working Paper

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