Structural transformation and political economy: A new approach to inclusive growth

Abstract

The "Jobless growth" of Pakistan’s economy and its acquaintances with frequent changes in different governments in power (both democratic and military regime) and its influence on economic growth persuades to conduct a qualitative analysis of the structural transformation on the disaggregated level to determine whether or not it has any connection or impact on different sectors of the economy. The fundamental objective of this study is to (a) explore how sectoral transformation has affected economic development and employment, as well as their relationships, and (b investigate how these dynamics have impacted the generation of sustainable employment in the economy. For this reason, the study takes sectoral transformation into account. The study applies the sectoral employment Elasticity technique for this objective. The results of our evaluation indicate that the economy functions better under military regimes than it does during democratic periods. The cause might be anything, but our goal is to determine the employment elasticity of Pakistan’s main political powers. As an agriculture-based economy, most of the population relies on the agriculture sector; hence, its decline highlights the need for reforms. If this sector doesn’t grow by creating additional jobs, it will lose its employment power.