ABSTRACT
Structural transformation is defined as the transition of an economy from lowproductivity and labour-intensive economic activities to higher-productivity and skill-intensive activities. The driving force behind structural transformation is the change of productivity in the modern sector which is dominated by manufacturing and services. It is also characterized by the movement of workforce from labour-intensive activities to skill-intensive ones. The movement of labour is severely affected by the existence of opportunities in skill-intensive sector because, even if the opportunities exist, labour may not necessarily move to a new sector unless the labour force is properly trained to be absorbed in the sector. If that be the case, then existing labour force would require requisite training before they move to the new sector. Another scenario could be that existing skills of labour force was used inefficiently. The labour force was already trained for skill-intensive activities, but was engaged in sectors where their skill was not fully utilized. Given the opportunities in the new sector, the labour force would move without any additional training. The later scenario may be considered the case of inappropriate allocation of human resources. In both cases, productivity of labour force would change resulting in changes in structure of the economy.
