Industrialization leads to structural transformation from "summary" of Theory of Economic Growth by W. Arthur Lewis
In the process of economic development, one of the key phenomena that occur is industrialization. Industrialization refers to the shift of resources from traditional sectors such as agriculture into modern industries. This shift is crucial for economic growth as it brings about structural transformation in the economy. As the industrial sector grows, it creates new opportunities for employment and increases productivity. This leads to higher incomes for the population and drives overall economic growth. However, industrialization also brings about changes in the structure of the economy. Traditional sectors like agriculture decline in importance as resources are reallocated to the industrial sector. Structural transformation refers to the changes in the composition of an economy as it develops. Industrialization is a key driver of structural transformation as it shifts resources from low-productivity sectors to high-productivity sectors. This shift is essential for sustained economic growth as it allows the economy to move away from reliance on traditional sectors towards more dynamic and productive industries. Furthermore, industrialization leads to the development of new technologies and skills that further drive economic growth. As industries become more advanced, they require a skilled workforce and infrastructure which in turn spurs further development in the economy. This creates a positive feedback loop where industrialization leads to structural transformation which in turn fuels further industrialization and growth.- Industrialization plays a critical role in driving structural transformation in an economy. By shifting resources from traditional sectors to modern industries, industrialization leads to increased productivity, higher incomes, and the development of new technologies. This process is essential for sustained economic growth and development in the long run.
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