Structural Heterogeneity

The concept of structural heterogeneity (SH) refers to the coexistence in a peripheral economy of two or more productive sectors with markedly different levels of productivity, typically a “high-productivity” primary sector oriented to international markets and a “low-productivity” industrial sector organized around the domestic market. The root of several macroeconomic problems of developing economies, such as the so-called “Stop and Go” cycles, exchange rate inflation and the external constraint to growth, can be directly or indirectly linked to the notion of SH, which far from being strictly technical in nature, is not, in general, independent of income distribution.