In economics, economic transformation refers to the continuous process of (1) moving labour and other resources from lower- to higher-productivity sectors (structural change[1]) and (2) raising within-sector productivity growth.[2] As such, economic transformation emphasises the movement from low- to high-productivity activities within and across all sectors (which can be tasks or activities that are combinations of agriculture, manufacturing and services). This movement of resources from lower- to higher-productivity activities is a key driver of economic development.[3]
Within-sector productivity growth (also called ′sector transformation') entails the adoption of new technologies and management practices that increase the efficiency of production. It can come about as a result of the increased efficiency of existing firms or as a result of the reallocation of resources away from the least productive firms towards more productive firms.
- ^ Herrendorf, Berthold; Rogerson, Richard; Valentinyi, Ákos (April 2013). "Growth and Structural Transformation". NBER Working Paper No. 18996. doi:10.3386/w18996.
- ^ McMillan, M., J. Page, D. Booth and D.W. te Velde (2017). Supporting Economic Transformation: An approach paper.
- ^ McMillan, M.; Rodrik, D. (June 2011). "Globalization, Structural Change and Productivity Growth". NBER Working Paper No. 17143. doi:10.3386/w17143.