Poverty reduction has been essentially associated with a profound structural transformation of the economy, a process entailing a reallocation of economic activities from the less productive sectors to the more productive ones. The speed with which this process takes place has been a key factor that differentiates deve-lopment levels across countries. The issue of structural transformation has been at the core of economic development debates with initial empirical analyses originated with Fisher (1935, 1939) and Clark (1940) who dealt with sectoral shifts in the composition of the labor force.
The concept of structural transformation has evolved over time. It shifted from a simple reallocation of economic activity across three broad sectors (agriculture, industry and services) that accompanies the process of modern economic growth to encompass issues of sustainability and inclusiveness.
Timmer (2007) defines structural transformation as a process characterized by a decline in the share of agriculture in GDP and employment; a rural-to-urban migration that stimulates the process of urbanization; a rise of a modern industrial and service economy; and a demographic transition from high to low rates of births and deaths. This requires proactive policies and strong push from state institutions, coupled with strategic capacity.
I published with Thomas Theisohn in 2003 a book entitled “Ownership, Leadership and Transformation”, where the issue of understanding the role of national agency was assessed in relation to structural transformation. We said then that traditionally, the notion of capacity came from the engineering world, and was understood to involve using particular processes to transfer knowledge, especially technical and scientific skills (Morgan 2001).
Little attention was paid to less sector-specific realms, including policy formulation, social and economic research, systems analysis and review and feedback mechanisms. Today we know Defining Structural Transformation in Africa* better: knowledge cannot be transferred. It has to be acquired, learned and reinvented. And it encompasses both the deep pool of local understanding that is the very foundation of learning, and the wealth of global information that can be reconceived to meet local needs. When adaptation fails to happen, however, there is no ownership and likely no lasting capacity development.
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