How economic transformation happens at the sector level: Evidence from Africa and Asia

Economic transformation is a continuous, long-term process of shifting labour and other resources from lower- to higher-productivity activities both within and between sectors, to facilitate aggregate labour productivity growth over a sustained period and result in more diversified and complex productive activities. Structural transformations are often started in agriculture but then go hand-in-hand with movements from agriculture to industry or higher-productivity services over time. This paper explores the factors that shape the prospects of success in economic transformation at the sector level. It provides an evidence base on the factors and conditions that drive or hold back economic transformation by focusing on examples where changes at a sector level triggered economic transformation, and the roles different actors played throughout this process.