As Economy Develops, the Relative Importance of Different Sectors of Production Changes
As economy develops, the relative importance of different sectors of production changes. Explain, with examples, why the pattern of employment might change as an economy develops.(12) Ways to develop in advanced and backward countries–result of such development How the employment pattern changes throughout the development Education lead to a growth in service sector.
A development of an economy, for developed countries, may mainly rely on technological innovation, and for developing countries; however, is much more about changing the structure of production and adapting existing technologies.
But both types of transformation entail a change in employment pattern, involving a shift from primary to secondary sector, and subsequently to tertiary one.(the three sector can also be described in terms of agriculture, industry, and services)
At first, agriculture is always an economy’s most important sector. But as income per capita rises, agriculture loses its primacy, giving way first to a rise in the industrial sector, then to a rise in the service sector. This is also caused by an increase in consumer demand on more goods and a soar up in labor productivity.
In many advanced countries, they have been witnessed a decrease in employment in agriculture labour productivity in agriculture and other primary sectors tends to grow more slowly than that in industry. The same goes for some of the developing ones, but with a much low pace or even worse for the poor countries, the reason may due to a rapid population growth and the lack of labor mobility.
In the course of economic development, education for example, might have also been improved through investment, giving society more educated employees. Service, as a sector tends to require relatively less natural capital and more human capital than producing agricultural or industrial goods, is just the suitable place for those educated people. Such a trend also lead to a growth in employment in service sector.