Structural Change and the Environment

Structural change usually refers to changes in the employment and value-added composition of an economy, driven by the evolution of markets, technology and demand. The composition of the economy—sector shares and sector integration at the national and global level—helps explain key aggregate indicators such as labour productivity. In terms of the environment, ‘environmental productivity’ (Gilli et al. 2014; Gilli et al. 2013) is one of the key factors that could help define a sustainable path in line with a structural change oriented sustainable development perspective. Seminal analyses related to structural change (McMillan & Rodrik 2011; Timmer & Szirmai 2000) emphasize the role of structural change as a driver of differential growth across countries due to heterogeneous shifts from low to high value-added activities. Asia is often used as an example of this, with many Asian countries having shifted their production structures from low to high value-added sectors, especially when compared with South America and Africa, which have seen shifts in the opposite direction