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The sectoral composition of economies is fundamental to the understanding of growth, unemployment and the relative performance of nations. This text models the relationship between these four factors from a single theoretical perspective in order to determine the foundations of the wealth of different nations. Special issues that are addressed include: the macroeconomic consequences of outsourcing and downsizing; unemployment and catching up; the relationship between growth and unemployment in a dual labour market; the relative stagnancy of Europe versus the USA in terms of productivity levels and unemployment; transitional dynamics in two-sector endogenous growth models; the causes of deindustrialization; and the role of trade unions and efficiency-wage considerations.