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Using panel data for several countries in different stages of development, we document three novel facts: (a) the share of industry and the investment rate are strongly correlated and follow a hump\u2010shaped profile with development, (b) investment goods contain more domestic value added from industry and less from services than consumption goods do, and (c) the evolution of the sectoral composition of investment and consumption goods differs from the one of GDP. We build a multi\u2010sector growth model to fit these patterns and provide two important results. First, the hump\u2010shaped evolution of investment demand explains half of the hump in industry with development. Second, asymmetric sectoral productivity growth helps explain the decline in the relative price of investment goods along the development path, which in turn increases capital accumulation and promotes growth.<\/jats:p>","DOI":"10.3982\/ecta16295","type":"journal-article","created":{"date-parts":[[2021,11,8]],"date-time":"2021-11-08T03:34:12Z","timestamp":1636342452000},"page":"2751-2785","source":"Crossref","is-referenced-by-count":30,"title":["Investment Demand and Structural Change"],"prefix":"10.3982","volume":"89","author":[{"given":"Manuel","family":"Garc\u00eda-Santana","sequence":"first","affiliation":[{"name":"Department of Economics and Business, Universitat Pompeu Fabra"},{"name":"CREi"},{"name":"Barcelona GSE"},{"name":"CEPR"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Josep","family":"Pijoan-Mas","sequence":"additional","affiliation":[{"name":"CEMFI"},{"name":"CEPR"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Lucciano","family":"Villacorta","sequence":"additional","affiliation":[{"name":"Research Department, Banco Central de Chile"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"2359","published-online":{"date-parts":[[2021]]},"reference":[{"issue":"3","key":"ecta200335-bib-0001","doi-asserted-by":"crossref","first-page":"467","DOI":"10.1086\/589523","volume":"116","author":"Acemoglu","year":"2008","journal-title":"Journal of Political Economy"},{"issue":"2","key":"ecta200335-bib-0002","doi-asserted-by":"crossref","first-page":"563","DOI":"10.1162\/00335530151144104","volume":"116","author":"Acemoglu","year":"2001","journal-title":"Quarterly Journal of Economics"},{"issue":"5","key":"ecta200335-bib-0003","first-page":"682","volume":"26","author":"Aizenman","year":"2007","journal-title":"Journal of Monetary Economics"},{"key":"ecta200335-bib-0004","author":"Alder","year":"2021","journal-title":"American Economic Journal: Macroeconomics"},{"issue":"1","key":"ecta200335-bib-0005","doi-asserted-by":"crossref","first-page":"1093","DOI":"10.1257\/aer.102.2.1093","volume":"102","author":"Alm\u00e5s","year":"2012","journal-title":"American Economic Review"},{"key":"ecta200335-bib-0006","doi-asserted-by":"crossref","first-page":"47","DOI":"10.1023\/B:JOEG.0000023016.26449.eb","volume":"9","author":"\u00c1lvarez Cuadrado","year":"2004","journal-title":"Journal of Economic Growth"},{"key":"ecta200335-bib-0007","doi-asserted-by":"crossref","first-page":"206","DOI":"10.1016\/j.jedc.2017.12.010","volume":"87","author":"Alvarez-Cuadrado","year":"2018","journal-title":"Journal of Economic Dynamics and Control"},{"key":"ecta200335-bib-0008","unstructured":"Antr\u00e0s, P. 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