Chapter 7: Identifying obstacles to structural transformation: an economic perspective

Whether in the four case study countries or in the successful development stories of South Korea and Taiwan at the time when they were at a comparable level of income per capita, the issue of development consists of providing the great mass of poor people with either decent jobs or access to other income-generating facilities which can help them to exit poverty. As an overwhelming majority of these poor people operate in the subsistence agricultural sector or other subsistence activities, a central issue of development is the structural transformation of the economy. Such a transformation may take the form of people moving out of agriculture to higher-productivity jobs in metropolises, middle-sized cities, or even so-called cottage industries in the countryside. The structural transformation may also include technological or organisational changes that progressively modify a subsistence agriculture into a market-integrated commercial farming sector exhibiting higher yields an incomes. This chapter summarises what the diagnostic exercises conducted in the four case study countries – Bangladesh, Benin, Mozambique, and Tanzania – reveal regarding the type of economic obstacles that hinder faster structural transformation, and the major institutional weaknesses involved.

A basis of comparison is needed to evaluate the nature and the strength of these obstacles in a particular country.