Labor is not the only way for poor countries to grow

Labor is not the only way for poor countries to grow

While it is important to move workers away from farming, there is nothing special about moving them into the workforce, according to a new paper by Richard Rogerson of Princeton SPIA. Found: Egan Jimenez, Princeton University

Industrialization is seen as the main way for poor countries to grow. For economic development – or to increase wealth and productivity – many poor countries feel that they should shift employment from agriculture to employment.

History reveals a common truth: During the Industrial Revolution, the United States and other developing countries moved from agriculture to production, leading to increased employment. goods and services, investment, and population growth.

Much of the economic research has shown that industrial differences play a key role in explaining the significant differences in living standards between rich and poor countries. Changes in production are seen by economists as a key factor in overall product growth. It allows poor countries to reduce the labor gap between them and rich countries.

However, a recent paper by Richard Rogerson, Charles and Marie Robertson Professors of Public and International Affairs, and others illustrates the relevance of this popular concept to today’s poor countries.

After compiling a database of comparative benchmarks for agriculture and labor, they found that there were more product gaps between rich and poor countries in labor. first of all.

They looked at 64 poor countries over a period of time from 1990 to 2018.

Information

While it is important to move workers away from the farm, there is nothing special about moving them to work. While researchers have found that productivity moves from agriculture to production, it is possible to earn more if production moves to another area, such as the United States. trade, transportation, and business services.

Service -led development, for example, is becoming more popular, leading to increased product availability and increased productivity among employees. low. Economic trends are seen in central countries such as Costa Rica and the Philippines, where business and technology services are the most common for most global services, according to the World Bank. .

“Our findings are relevant for poor countries like India that are shutting down the industry and instead working on what’s called service leadership development.

The full working paper, “New Evidence on Sectoral Labor Productivity: Implications for Industrialization and Development,” was available as a working paper in March 2022 by the National Bureau of Economic Research (NBER). This paper has not been reviewed or under review by the NBER Board of Directors in conjunction with the official NBER publications.


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More information:
The worksheet is available as a PDF here.

Presented by Princeton School of Public and International Affairs

Directions: Labor is not the only way poor countries can develop (2022, March 28) Retrieved 28 March 2022 from https://phys.org/news/2022-03-isnt-poor -countries.html

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