Thus, the accounting framework links the sectoral allocation of labor to the consumption shares, the trade shares, the intermediate shares, the wage gaps, and the value-added shares of the sectors. I exploit this relationship and stack the Latin American countries against the economies that have attained a high industrial share of employment to gauge the relative success of the factors. The input-output data are an essential ingredient of the analysis which I source from the OECD database (OECD (2017)) which contains this information for many countries – including seven countries in Latin America, for 1995–2010/11. To construct a comparator set for these Latin American economies, I pick countries in the GGDC 10-Sector database (Timmer _et al._ (2015)) in which the peak industrial share during 1995-2010/11 exceeds 30 percent. Fortunately, the OECD database has information on all these comparator countries barring Mauritius. I also add China to the comparator set as its peak industrial share falls just short of the 30 percent threshold.

On average, the share of employment in the broad industrial sector in a Latin American economy is 11 percentage points lower compared to the comparator set. The counterfactual exercise reveals that more than half of this gap is accounted for by differences in consumption shares. Cross-country differences in sectoral wage gaps and linkages are also significant and roughly account for 5 and 3.5 percentage points of the gap.<sup>2</sup> Differences in trade shares, on the other hand, play a muted role and can account for only a tenth of the gap in industrial employment shares. The findings for the manufacturing sub-sector which constitutes the bulk of the industrial gap, are somewhat different. Though differences in final consumption and wage gaps are still significant, they can only account for a quarter of the manufacturing gap. Differences in sectoral linkages emerge as the strongest factor and still account for a third of the employment share gap. The explanatory power of trade shares is more pronounced in manufacturing, but wanes compared to what can be explained by differences in final consumption, linkages and wage gaps. Looking at individual countries within the Latin American sample, I find a moderately dominant role of trade shares for Colombia, Costa Rica and Mexico. The closest the differences in trade shares come in explaining the employment gap is for the manufacturing sub-sector in Costa Rica where it accounts for almost half of the 8.7 percentage points gap.

In a second quantitative exercise, I turn my attention to the experience of the Latin American economies during 1995–2010/11 in which the industrial and the manufacturing shares of employment declined by 2 and 3.5 percentage points respectively. The exercise helps in parsing determinants that dragged the employment shares down from the ones that provided tailwinds towards an expansion. Trade, arguably more essential for manufacturing, did not play a primary role in driving manufacturing shares down. It is true that changes in trading patterns allude 2Berlingieri (2014) studies the evolution of linkages in the post-war US and shows that the rise in forward linkages of the services sector is quantitatively relevant in accounting for the structural change. However, the role of outsourcing in driving transformation goes back at least to Fuchs (1968). Also, see Acemoglu _et al._ (2012) and Jones (2013) which consider variation in linkages across countries and time.

2