Heterogeneous Paths of Industrialization.

This article examines the heterogeneity in industrialization experiences across countries using a benchmark model of structural change, focusing particularly on the phenomenon of premature deindustrialization—where the peak manufacturing employment share occurs at lower levels of development than historically observed. The model robustly generates hump-shaped employment patterns in manufacturing and shows that differences in sectoral productivity growth rates, especially slower agricultural productivity growth, can quantitatively explain much of the variation in peak manufacturing employment shares across a sample of Asian, Latin American, and European economies. Calibrated to the U.S. industrialization experience, the model’s predictions align closely with observed data, and inferred productivity growth profiles from employment shares strongly correlate with measured agricultural productivity growth. While the model abstracts from trade and capital accumulation, the authors note these factors may influence industrialization paths in some countries, particularly through dynamic trade imbalances and investment patterns. Overall, the findings suggest that differences in sectoral productivity dynamics, notably in agriculture, are central to understanding diverse industrialization trajectories worldwide.