What could go wrong?

Kevin and I used to marvel at the myriad methods of human transportation in Latin America.  Some of our favorites came from Guatemala, where we saw a man riding a giant milk tanker like a horse down a highway, men standing on hitches between a trailer and a cab of a semi (also on the highway), and buses that would take off with a full load of luggage on top, leading some poor guy to try to arrange and secure the luggage while the vehicle was already full speed ahead.

From one of my favorite tweeters (@_youhadonejob) though, we found a new one which really boggles the mind.  Here is a new (but presumably not better) way of transporting a ladder:


Like the title of this post asks, what could possibly go wrong with this method?

The ladder of development

An interesting new NBER working paper that will be a chapter in the Handbook of Economic Growth (ungated version here), gives some great pictures of the structural transformations we call development from 1800 – 2000.

Here’s the evolution of Agriculture’s share of employment in some rich countries (you can clic all the pics for better images):


At a GDP per capita of $700, agriculture is 80-85% of total employment. By the time a country hits the $3000 mark, it’s down to 40%, and at $22,000 it is negligible.

Getting people out of subsistence agriculture is job one of development!

As the switch from agriculture to manufacturing happens, countries get richer:


At $700, there is virtually no manufacturing employment, at $3000 manufacturing is around 40% of total employment. By the time a country hits $22000, manufacturing has fallen to around 20% of employment.

Then there’s services:


Poor countries have very little service sector employment, the richest countries in 2000 had around a 75% services share in total employment.

Here’s the countries in the graphs (see the paper for more details):


As far as we know, this set of structural transformations is the only way for a country to get rich. High employment in services isn’t the sign of a problematic economy, it’s a sign of a very rich economy.