Dynamics of structural change and the quality of institutions in the context of an open developing economy

"Institutions are the man-made constraints that structure political, economic and social interactions." North (1991). According to Levchenko (2007), the term "institutions" refers to a wide range of structures that influence economic outcomes such as contract enforcement, property law, etc... Referring to the literature on institutions, it indicates that institutions play an important role in economic performance. In terms of structural change, different patterns of structural change have been observed in both formerly and newly industrialized countries. Given the importance attached to institutions in recent economic studies, the question was posed intuitively in order to understand the role of institutions in these different models of structural change.Chapter 1 examines the relationship between institutional quality and structural change. We look at which types of institutions (political, legal and economic) are most important in the process of structural change, over a sample of 103 countries from 1984 to 2018. We first use the technique of principal component analysis and hierarchical ascending classification to explore our dataset. Then, we empirically investigate the relationship using a threshold panel model. We find that legal, economic and political institutions have significant effects on structural change. However, these effects differ according to the level of institutional thresholds.When considering international integration in chapter 2, it is generally viewed in terms of its impact on a country's growth and/or development. We examine the relationship between openness and structural change, with the notion of institutional threshold over a sample of 98 countries between 1984 and 2018 and using GMM system. Our study shows that institutional quality is important in explaining the relationship between openness and structural change. However, its importance is only relevant when countries reach a certain threshold of institutional quality. And for the degree of institutional similarity of the countries in our sample with the USA, China and European Union (EU) countries, our study shows a significant negative impact of different institutions compared with the USA, EU and China.In chapter 3, we take into account the deindustrialization process observed in sub-Saharan African countries, which is premature according to some authors such as Rodrik (2013, 2016). Global demand for services, which is growing faster than demand for manufactured goods, and weak domestic demand are said to be the causes of this deindustrialization. However, according to other authors such as Loungani et al, (2017), if these countries become deindustrialized, they should still be able to benefit from development opportunities through the services sector, which would be a new development path without factories (Ghani and O'Connell, 2016; Dihel and Goswami, 2016). This chapter tests the impact of different demands (global and domestic) on structural change and industrialization, and the impact of different sectors on growth, on a sample of 57 developing countries in a panel data model over the period 1984 to 2017, with the Hausman-Taylor estimator. The results show that Sub-Saharan African countries suffer from premature deindustrialization, which is rooted in demand and supply mechanisms. And the service sector generates little spillover effect on income in SSA countries, given the low knowledge intensity of these services.