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• The paper documents developments in Indian economic performance and the role of structural change in this performance. • Manufacturing is dominated by informal labor, which has a deleterious effect on overall manufacturing performance. • Productivity growth is driven by within sector growth, with positive contributions of formal and informal activities to this. • Labor reallocation to the informal segment of the manufacturing sector is growth reducing in the Indian manufacturing sector. • A shift to more productive informal activities across sub-sectors exists, but this doesn't offset the negative within effect. This paper examines the role of structural change in India's performance, and in particular the role of the informal segment in the stagnant growth of the Indian manufacturing sector. Using counterfactual analysis – including a modified shift-share approach – the paper considers to what extent the informal sector can help explain the poor performance of Indian manufacturing over the period 1980-2011. The results suggest that the informal segment of manufacturing has been a drag on overall manufacturing productivity growth, with the informal manufacturing segment unable to provide a productivity bonus when absorbing workers from the agricultural sector. Results from the shift-share analysis indicate that labor reallocation to the informal segment of the manufacturing sector is growth-reducing, with structural change being the main source of this reduction, an effect which in turn is driven by movements of employment within manufacturing sub-sectors. [ABSTRACT FROM AUTHOR]

• We present a multinomial approach not previously used in the macroeconomic literature for the study of growth and industrial dynamic. • The successful growth dynamic observed during the 1995–2014 period in several emerging economies is very heterogeneous in terms of their industrial transformation. • Developed economies grew slowly and, generally, through episodes of limited industrial transformation. • The relationship between economic fitness and the countries' industrial and growth dynamics generates a path dependency in economic development. • The fitness score of a country –that moves very slowly during one or two decades– establishes the most common sequences of episodes to be observed. When analyzing countries' medium- and long-term economic performance, it is important to study jointly the dynamic of growth and the industrial evolution that determines how the productive structure changes over time. In this paper, we use the Economic Fitness metric to describe the competitiveness of the countries' industrial structure, and classify economic episodes, with five-years windows, to establish how countries grow (i.e., above or below a trend, and with a dynamic or static industrial structure.) We show a complex growth dynamic using data covering two decades (1995–2014) for a large set of countries. This pattern indicates that the observed sequences of spells vary substantially even between countries within the same growth regime (low, medium, and high). Moreover, we find a robust statistical relationship between these spells and Economic Fitness with a multinomial econometric model. In particular, we show that economies with higher fitness are more resilient since episodes of below-average growth and the net disappearance of competitive firms are less likely to happen. [ABSTRACT FROM AUTHOR]

This paper introduces a new measure of structural change labeled the effective structural change (ESC) index, and applies it to study the effects of structural change on economic growth, using a sample of 19 Asian economies for the period from 1970 to 2012. This new approach provides an effective tool to examine growth effects of structural change. The paper’s findings suggest the importance of reforms to foster productivity-enhancing structural change and need for strategies to overcome their short-term costs. The paper also indicates that ESC can be used as a useful indicator for monitoring the impacts of structural reforms. [ABSTRACT FROM AUTHOR]

This paper analyzes the impact of production complexity and its adaptability on the level of output and on its rate of growth. We develop an endogenous growth model where increased complexity raises the rate of economic growth but has an ambiguous effect on the level of output. Our empirical measure of production adaptability captures the proximity of production sectors within the product space, which we modify to reflect intra-industry trade and the international fragmentation of production. We test the model against a sample of 89 countries over the two decades to 2009 and find that its main predictions are validated. [ABSTRACT FROM AUTHOR]