Structural Transformation in Out-put in J&K State Economy (1981-2011)

Abstract

The structural change theory states that as GDP per capita increases, the % share of out-put in primary sector declines whereas the % share of the secondary sector initially increases and subsequently decreases ,while the % share of tertiary sector increases steadily. The structural change in out-put across Jammu & Kashmir economy's key is not following the path way of the structural change theory of out- put which implies that percentage share of out-put in primary sector declines systematically as GNP per capita income rises whereas the percentage share of both secondary and tertiary out-put rise to offset this decline. But, this offset takes place in such a manner that at first stage of structural change theory, major percentage share of out-put reallocates to secondary sector (almost 75%) and the rest is reallocated to tertiary sector and during the second stage of structural change theory of out-put, shift of out-put from primary and secondary sector takes place to tertiary sector. Keywords: Key sectors, Structural Transformation theory of Out-put, Structural Change Index (SCI), Linking Factor Method, growth rates I. Introduction The structural change in output and employment are considered to be important indicators to measure the economic performance of the economy. The sectoral composition of output and employment are the most crucial indicators to measure the contribution of the different of the state economy. One of the best known characteristics of output and labour in developing economies is that most output comes from primary sector and most labour force work in the same sector. Primary share of output and employment is highest in the poorest economies and declines systematically as GNP per capita rises. The shares of both secondary and tertiary sectors output and employment rise to offset this decline. But, during the first stage of the structural change theory, most resources shifted from primary to secondary sector and then finally in the second stage of the structural change theory resources shifted from both primary and the secondary to the tertiary sector of the economy. There happens inter-sectoral equality in case of output and employment among the three main of the economy. The concept of inter-sectoral equality refers that all the three main contribution in terms of output and employment are the same. The inter-sectoral equality is the indication of the absences of disguised unemployment among the key of the economy. In simple words, it is believed by the structural economists that inter-sectoral equality in terms of output and employment between the three key of the economy is the important indicator to check the overall health of the state economy as it depicts the equality in productivity and income of an economy. Objectives Some of the explicit objectives of the study are as under: 1. To analyze the changes in growth rates and composition of output in the key of the state economy.