Structural change and economic growth in selected emerging economies

Abstract

Purpose

This paper aims to investigate the relationship between structural change and economic growth for a panel of four developing countries, namely, Malaysia, Nigeria, Turkey and Indonesia over 1960-2010.

Design/methodology/approach

The study extent the growth equation by incorporating degree of openness, labour and investment and construct structural change indices – modified Lilien index and the norm of absolute values. It utilizes the recently developed panel cointegration techniques to test and estimate the long-run equilibrium of the growth equation.

Findings

The results confirm that structural change and economic growth are cointegrated at the panel level, indicating the presence of long-run equilibrium relationship. However, the impact of structural change on economic growth seems to be small and evolve slowly.

Originality/value

The findings indicate the need for policymakers to identify the binding constraints that impede growth and the importance of institutionalize policy to encourage investment in productive sectors.

Citation

Zulkhibri, M., Naiya, I. and Ghazal, R. (2015), "Structural change and economic growth in selected emerging economies", International Journal of Development Issues, Vol. 14 No. 2, pp. 98-116. https://doi.org/10.1108/IJDI-09-2014-0064