Most Popular Books by David Booth

Economic transformation is a continuous, long-term process of shifting labour and other resources from lower- to higher-productivity activities both within and between sectors, to facilitate aggregate labour productivity growth over a sustained period and result in more diversified and complex productive activities. Structural transformations are often started in agriculture but then go hand-in-hand with movements from agriculture to industry or higher-productivity services over time. This paper explores the factors that shape the prospects of success in economic transformation at the sector level. It provides an evidence base on the factors and conditions that drive or hold back economic transformation by focusing on examples where changes at a sector level triggered economic transformation, and the roles different actors played throughout this process.

Ceteris Paribus, highly productive industries should translate into high economic growth and high expected returns. To test this, we create a productivity factor using industry-level total factor productivity estimates. This factor captures the difference in returns between industries with high productivity and industries with low productivity. On average, the productivity premium contributes 0.75 to 2.41 percent per annum for the range of productivity factors we construct, from July 1963 to December 2002. To test whether productivity drives the cross-section of stock returns, we augment standard asset pricing models with this productivity factor. Our results show that i) in accordance with our hypothesis, productivity has a bigger impact on smaller firms, and that growth firms have a higher productivity beta, and ii) productivity is priced even when size and book-to-market factors are included. Finally, we examine the impact of productivity in different market structures, where the latter is measured by the Herfindahl index for each industry.