Catching up and Structural Change

In this paper we analyze the dynamics of catching up for a backward three sector economy and investigate the transitional structural adjustment process. A theoretical model is developed to explain international development and trade patterns as a transitory process of technological catching up. The endogenous adoption of international available technologies will cause permanent structural adjustment for a non symmetric sectoral diffusion of international technologies. The model is individually tested for 146 countries. The estimations support the implied s-shaped path of upgrading for a large number of countries. The estimation results are used to calculate the speed of convergence and the final income position for each of the 146 countries.