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The Unsung Drivers of Structural Transformation in Developing Economies

Author

Listed:
  • Debkumar Chakrabarti
  • Sankalpa Bhattacharjee
  • Pradeepta Sethi

Abstract

This paper undertakes a comprehensive review of some of the less‐discussed factors that harbor the potential to explain the wide variations in structural transformation, especially amongst developing economies. We begin by critically reviewing the effects of income, relative price, and international trade, which are generally considered drivers of structural change, with special emphasis on developing economies. Subsequently, we bring to the forefront three comparatively less‐discussed factors—income inequality, financial market imperfections, and government policy that can explain a large part of the divergences in the transformation patterns of developing economies. Underscoring the limitation of the conventional discourse that relates cross‐country differences in structure in terms of cross‐country differences in manufacturing, we emphasize the need for the theoretical discourse to move beyond the industry‐centric approach to focus on the recent research that views the surge of services as an additional engine of growth and the possible avenues through which it can affect structural transformation.

Suggested Citation

  • Debkumar Chakrabarti & Sankalpa Bhattacharjee & Pradeepta Sethi, 2025. "The Unsung Drivers of Structural Transformation in Developing Economies," Journal of Economic Surveys, Wiley Blackwell, vol. 39(5), pages 2134-2151, December.
    • Handle: RePEc:bla:jecsur:v:39:y:2025:i:5:p:2134-2151
    DOI: 10.1111/joes.12688
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    Cited by:

    1. Sadik Aden Dirir, 2026. "Sectoral Evolution and Structural Transformation in Djibouti: A Multivariate and Regularized Regression Analysis Toward Achieving SDG 9," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(2), pages 2126-2145, April.
    2. Meshael Batarfi & Nadia Yusuf, 2026. "The Structural Transformation of Leisure and Modernization of Sports Consumption in Developing Economies," Journal of Sports Economics, , vol. 27(3), pages 333-353, April.

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