Structural Transformation, TFP and High-Quality Development

In this paper, we performed an empirical study on the TFP effect of structural transformation based on panel data of economic growth in 169 countries across the world.Our findings are threefold: First, structural transformation has an inverted U-shaped effect on TFP. When the degree of structural transformation is on the left side of the inflection point, structural transformation is conducive to softening industrial structure and inducing TFP; when the degree of structural transformation is on the right side of the inflection point, structural transformation will induce industrial hollowing out and inhibit TFP.Second, since the reform and opening up program was launched in 1978, China’s structural transformation has evolved from the stage of adaptation to the stage of strategic adjustment with an increasingly evident trend towards a service-based economy, but structural transformation remains on the left side of the inflection point of the inverted U-shaped curve, i.e. the TFP effect of structural transformation is positive. Third, TFP improvement lies at the heart of high-quality development. In pursuing high-quality development, China should lower growth rate expectations, attach greater importance to supply-side structural reforms, and accelerate structural transformation to promote TFP improvement.