Empirical Evidence on the Topological Properties of Structural Paths and Some Notes on Its Theoretical Explanation

Abstract

The mathematical literature has developed a large pool of topological concepts and theorems for dynamic systems analysis. The aim of our paper is to make a first step towards the application of these concepts and theorems in the analysis of (long-run) structural change (in the three-sector framework). Our approach focuses on two of the most basic topological notions, namely intersection and self-intersection of trajectories on a two-dimensional domain. We discuss the mathematical foundations of the application of these concepts in structural change analysis, use them for analyzing empirical data, and elaborate new stylized facts stating that different countries’ structural change trajectories are (non-self-)intersecting. Finally, we discuss briefly the theoretical explanations of (non-self-)intersection and a wide range of new research topics relating to (a) the topological classification and comparison of models and evidence and (b) the application of (further) topological concepts in standard branches of growth and development theory.

Keywords: structural change, labor, allocation, savings, functional income distribution, long run, dynamics, trajectory, intersection, self-intersection, differential equations, geometry, topology

JEL Classification: C61, C65, O41