Industrialization without Innovation

70 Pages Posted: 25 May 2018 Last revised: 29 Oct 2022

See all articles by Paula Bustos

Paula Bustos

Universitat Pompeu Fabra - Department of Economics and Business; Barcelona GSE

Juanma Castro-Vincenzi

Harvard University - Department of Economics

Joan Monras

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Barcelona Graduate School of Economics (Barcelona GSE)

Jacopo Ponticelli

Northwestern University - Kellogg School of Management; NBER

Multiple version iconThere are 3 versions of this paper

Date Written: February 23, 2022

Abstract

Labor-saving technologies in agriculture can foster structural transformation by releasing workers who find jobs in manufacturing. The traditional view is that factor reallocation towards manufacturing generates innovation and productivity growth. We document, instead, that regions more exposed to a large and exogenous increase in agricultural productivity in Brazil industrialized but experienced lower manufacturing productivity growth. Workers released from agriculture were mostly unskilled and primarily moved to the least skill-intensive manufacturing industries. This paper explores the various mechanisms that can account for the observed manufacturing productivity decline. Changes in worker composition and lower incentives to innovate within manufacturing play prominent roles.

Keywords: Structural Transformation, Skill-Biased Technical Change, Labor Mobility, Genetically Engineered Soy, Brazil

JEL Classification: F16, J43, O13, O14, O33, O41

Suggested Citation

Bustos, Paula and Castro-Vincenzi, Juanma and Monras, Joan and Ponticelli, Jacopo, Industrialization without Innovation (February 23, 2022). Global Poverty Research Lab Working Paper No. 18-106, Available at SSRN: https://ssrn.com/abstract=3178274 or http://dx.doi.org/10.2139/ssrn.3178274

Paula Bustos

Universitat Pompeu Fabra - Department of Economics and Business ( email )

Carrer Ramon Trias Fargas 25
Barcelona, 08005
Spain

HOME PAGE: http://bit.ly/3IUyrEk

Barcelona GSE ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Juanma Castro-Vincenzi

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

Joan Monras (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Jacopo Ponticelli

Northwestern University - Kellogg School of Management ( email )

2211 Campus Dr
Evanston, IL 60208
United States

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/ponticelli/index.html

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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