Policy Brief No. 53 of 2018-2019 on Promoting Structural Transformation for High Productivity Jobs in Kenya

Abstract

Structural transformation refers to the transition of an economy from low productivity and labour intensive economic activities to higher productivity and skills-intensive activities. The key driver of structural transformation is the need to shift from reliance on low productive sectors such as the agricultural and subsistence sectors towards the modern sector which is dominated by services and manufacturing. Such a phenomenon opens opportunities for more productive jobs and promotes a country's economic growth as it ensures resources are redistributed and used more efficiently. Generally, structural transformation is defined by four essential and interrelated processes: a declining share of agriculture in national output and employment; rural-tourban migration underpinned by rural and urban development; the rise of a modern industrial and service economy; and a demographic transition from high rates of births and deaths to low rates of births and deaths associated with better health standards in developed and urban areas.