@article{Lofgren:332592,
      recid = {332592},
      author = {Lofgren, Hans and Cicowiez, Martin},
      title = {Analyzing Country Strategies for Structural  Transformation, Poverty Eradication and Shared Prosperity:  Method and Application to an Archetype SSA Country},
      address = {2015},
      pages = {58},
      year = {2015},
      note = {Presented at the 18th Annual Conference on Global Economic  Analysis, Melbourne, Australia},
      abstract = {Many developing countries view export-oriented structural  transformation as offering the most promising path toward  accelerated growth, poverty reduction, and shared  prosperity. This paper develops an approach to medium- and  long-run analysis of policies and other aspects of 2 such a  transformation. The approach integrates elements of  product-space (PS) analysis with CGE modeling. In this  pilot study, the approach is applied to an archetype SSA  country and used to analyze the impact of alternative  export market conditions and government policies on growth,  sector structure, poverty, and shared prosperity. The  analysis uses the core version of MAMS (Maquette for  Millennium Development Goal Simulations), a  recursive-dynamic CGE model, augmented to incorporate the  following PS features: (a) proximity between sectors  influences loss in labor effectiveness from reallocation;  (b) proximity-weighted learning-by-doing, driven by  accumulated production, influences activity TFP; and (c)  penetration of export markets may lead to quality upgrading  and higher export prices. Against this background, the  model is referred to as the core version of MAMS-PS. The  augmentation of the model to cover PS features requires a  parallel augmentation of the database, including (a) a  global matrix of proximities between sectors based on  export data for tradable goods sectors and value-added data  for other sectors; (b) country- and sector- specific data  on distance of base-year export prices from the frontier of  unit prices (the prices received top-quality exporters);  and (c) econometric estimates of the determination of  country-level deviations from average unit export prices.  In simulations, broad goods sectors are identified as  promising for targeted policies on the basis of the  findings from stand-alone PS analysis by Hausmann et al.  (2014). Our results show that policy incentives (via taxes,  subsidies and/or public investment) in favor of promising  sectors may have significant positive effects (in terms of  growth, poverty reduction, and reduced inequality).  Conversely, incentives in favor of sectors that lack these  characteristics have opposite effects. Such results may be  negated by adverse world price changes for promising  sectors.},
      url = {http://ageconsearch.umn.edu/record/332592},
}