SECTORAL STRUCTURE AND SOCIO-ECONOMIC DEVELOPMENT: SEARCHING FOR THE RELATIONSHIP*

This paper provides an overview of sectoral structure and its changes in the European and Central Asian countries. In the paper we analyse the sectoral structure in both country groups and try to figure out the development trends being accompanied by these changes. The paper aims to empirically investigate the relationship between sectoral structure and socio-economic development. One of the essential characteristics of the structural change process is the growing importance of service sector, i.e. tertiarization. The speed and mode of tertiarization can be different. First, this can lead to downsizing industry; second, in countries with high share of primary sector the process can result in downsizing agriculture, without any loss in industry share. A challenging research question for this study is whether the process of tertiarization results from the overall globalization or depends also on the socio-economic development level of a certain country. We use the cross country data about the European Union and OECD member countries as well as Newly Independent States of former Soviet Union on socio-economic development and sectoral distribution of GDP, using data from the World Bank, the United Nations and Freedom House