Re-Examining the Narrative of Structural Transformation: Insights from India’s Development Experience

Abstract

The narrative of structural transformation, based on the experience of global North, posits that the process of development involves gradual ‘modernisation’ of the overall structure of the economy, where the traditional/low-productivity sectors give way to and support the modern/high-productivity sectors. However, much of the global South has not been able to experience this process along the anticipated lines, as a significant proportion of their workforce is still engaged in the low-productivity agriculture and non-agriculture informal sectors for their livelihood. We highlight that the dominant narrative does not take into account the importance of specific historical conditions, particularly the role of colonialism, that facilitated the process of structural transformation in the global North. The altered structural conditions in the post-colonial era, both at global and domestic level, question the possibilities of a similar process unfolding in the global South. In this regard, we analyse India’s development experience, both at macro and micro level, focusing on two villages of the Indian state of Tamil Nadu, surveyed in 1994 and later in 2018. We illustrate that the process of labour and employment transition across sectors is highly complex and heterogeneous. Rather than being driven solely by productivity growth, the nature and direction of these changes are characterised by economic distress. We argue that the prevailing narrative, which presents a linear understanding focused on productivity differentials across sectors, is inadequate to understand the nature of this transition in the South. Instead, the process needs to be understood in the particular socio-economic and ecological context specific to a given space and time.