A structural (change) approach to regional development traps and the development ladder in Argentina

Abstract

The literature offers different definitions of development traps, which largely depend on the conceptual frameworks and the methodologies used. Instead of looking at this phenomenon from the reductionist side of relative income, GDP or economic growth, this paper aims to revisit the link between economic development and structural change, proposing a structural (change) approach to development traps. From this perspective, we define regional development traps as the inability of some regions to evolve and transform their productive structures along four dimensions (productivity, technological intensity, value added and diversity), thus remaining stuck at different levels of the regional development ladder. Based on employment data for the main 85 labor market areas in Argentina between 1996 and 2019, we propose two alternative and intuitive ways to identify regional development traps following the development ladder metaphor. The results reveal that several Argentine regions are trapped at low and intermediate steps of the development ladder, while others show regressive (or favorable) trajectories towards (or away from) these levels. Finally, we verify the relationship between regional development traps and movements along the ladder and different performance indicators.