Economic Structure

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Teaching Outlines

Concept 1: Structural Transformation


Large-scale transfer of resources from some sectors to others in a system, necessitated by fundamental changes in its policies or objectives. (

====Meaning====: Structural transformation is an important feature of the development process and is the cause and effect of economic growth. The four key process of structural transformation are: Declining share of agriculture in GDP and employment Rural-urban migration which stimulates urbanization Rise of industry- and service-based economy Demographic transition from high birth and death rates (indicates poor health) to low birth and death rates (indicates better health)

More background

General - Timmer lecture [1] For Indian context - EPW paper[2]

Useful Tables

-- Agricultural Productivity 1. FAO Stats [3] Page 4 - Charts 1 and 2 Page 8 - Chart 6 Page 9 - Maps 4 and 5 Page 15 - Map 9 Page 24 - Table 1 (Population and Structure - share of agricultural population) Page 32 - Table 3 (Economy - shares of agriculture, industry and services to GDP) Page 44 - Table 6 (Labour composition of agriculture) 2. EPW Paper Page 2 - Figure 1 Page 3 - Table 1

-- Migration

*Discuss*: Have you seen many youth migrate from your village? Can you think of some effects this has on their families and the village economy?

-- Shares of agriculture, industry and services to GDP:

-- Birth and Death Rates 1. Demographic Indicators Page 16 - Tables 1.2.1 - 1.2.6

Concept 2: Sources of Income

Market: It is a place where buyers and sellers interact to determine prices and exchange goods and services.

Factor market: a place where factors of production (land, labour, physical capital and human capital) are bought and sold

Product market: where producers sell their goods and services to consumers [referenced Samuelson and Nordhaus, 18th edition]

Useful Links: flow.jpg

*Think*: Where do you think your parents’ salary or wages fits in the above diagram?

  • Do*: Find out about some taxes that the government collects from individuals and companies.
  • Do*: Draw the circular flow of income for your village economy using examples from what you see.
  • Discuss*: Using examples from your knowledge of history, discuss the evolution of the role of government in an economy.

Concept 3:Sources of Employment

[insert table about employment by sector in India] [insert unemployment stats]

  • Do*: Classify your friends’ and acquaintances’ jobs into the three sectors.
  • Discuss*: What trends do you observe in the unemployment tables? Discuss possible explanations.
  • Discuss*: Can you identify anyone who is an NREGA beneficiary? Why do you think the program was introduced? Talk to them about the kind of walk the program offers, its impact on their decision to migrate (or not)

Concept 4: Static vs. dynamic economy

Static economy: is one in which normal economic activities (production, consumption, etc.) take place but there is no change in the size of the economy or in the level of national output, stock of capital, prices and employment. Such an economy is not realistic but is useful for theoretical analysis. Another feature is that the variables used in this analysis are in the same point of time. A static economy is therefore a timeless economy. The purpose of using such a model is to understand relationships between related variables under static conditions.

Dynamic economy: is one in which economic forces and factors are constantly changing. Such a model takes time into account and is therefore useful to predict the future course of an economy.