WIDER Annual Lecture 18
Managing Structural Transformation

A Political Economy Approach

In his lecture Professor Timmer highlights the vital, and precarious, period of structural transformation, when agriculture represents a declining share of the economy and labour moves to the cities. Focusing on the difficulties and paradoxes that developing economies face when navigating this liminal phase, he argues that the process has, if anything, become more difficult over time. Historically, successful structural transformation has been the only sustainable pathway out of poverty, as labour productivity in the agricultural and nonagricultural sectors converges. Professor Timmer warns, however that there are other ‘possible outcomes’, and that states should be wary of them. Much of Asia, he argues, may be heading into a ‘Lewis Trap’, where the income gap between the two sectors actually increases, while much of sub-Saharan Africa moves towards ever smaller farms, reducing the prospects for productivity further. In these trying environments he looks at each aspect in turn-examining the role of markets in efficiently allocating resources, of governments intervening to provide the socially-desired results that markets alone cannot guarantee, at the micro-level of individual food security, at the macro-level of aid agendas, and asks, ‘is there any way to manage the process without hurting the poor?’.