Innovations, Structural Transformation and Employment across Space and Time

Innovation triggered economic transformation of an economy has a far-reaching implication for employment opportunities. In this paper, an attempt is made to understand the historical patterns of economic transformation across space and time. The underlined theory of structural change is reviewed to identify the causes of successful economic transformation for learning lessons to enact public policy for a developing economy such as India. The stylised facts emerging from the western developed countries are reinterpreted for understanding the empirical regularities, which are supplemented from the recent experience of the newly industrialised countries of East Asia. It is abundantly evident that there are differential impacts of innovation driven by structural transformation on employment. This requires a suitable design of public policy that changes the infrastructure both hard and soft as per the stage of economic development to draw substantive advantages. From empirical evidence and informed debate on the India’s structural transformation shows that industrialisation is required for attaining the level of a developed country status. However, the complementarity of manufacturing and services economic activities can be harnessed for faster, inclusive, sustainable development, and employment growth.