Series: Occasional Papers. 2003.
Author: Omar Rachedi.
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Abstract
This paper studies how the variation in sectoral productivities shapes the sectoral
composition of the Spanish economy from 1980 to 2015. I first document an asymmetric
behavior of sectoral productivities: the productivity of services declines over time, whereas
the productivity of manufacturing increases until the 1990s, before slowing down. I feed the
path of sectoral productivities observed in the data into a model of structural transformation
with two sectors (services and manufacturing) which are connected by an Input-Output
matrix. The model reproduces the variation of the gross output services share of the
Spanish economy between 1980 and 2015. The model implies that – even absent changes
in the trends of sectoral productivities – the annual growth rate of GDP between 2015 and
2050 shrinks by 0.6 percentage points with respect to the average growth rate between
1980 and 2015. Hence, annual GDP growth would decline from 2.3% to 1.7%. If sectoral
productivities were to equal the levels observed in the Euro Area between 1980 and 2015,
the average growth rate of Spanish GDP between 2015 and 2050 would be 2.1%.