Paper short abstract:

We argue that the framework of structural transformation (ST) is inadequate to understand the specific nature of capitalist development in contemporary times. The study reveals that the process of ST is highly complex and heterogeneous due to embeddedness in social institutions and local ecology.

Paper long abstract:

Much of the dominant literature in development economics, taking off from the experience of the developed economies, posits the idea of structural transformation as gradual ‘modernisation’ of the overall structure of the economy, where the traditional/non-capitalist sectors give way and support the modern/capitalist sector. However, many of the economies across the global South have not been able to experience this expected path of structural transformation as the majority of the workforce is still engaged in the non-capitalist agriculture sector for their livelihood. At the same time, the majority of people migrating from the agriculture sector find precarious employment in the urban non-capitalist informal sector.

We argue that the framework of structural transformation is inadequate to understand the specific nature of capitalist development in contemporary times. In this regard, focusing on India, we provide some illustrations from a nationally representative household-level survey and discuss in detail the case of two villages in South India which have been surveyed in 1994 and later in 2018. The study reveals that the process of structural transformation is highly complex and heterogeneous which goes against the linear understanding of the process. The nature and direction of these changes are influenced by the capitalist system’s embeddedness in social institutions and local ecology. These illustrations sharply point out that the capitalist trajectories of two adjacent villages, even after falling under the same region or administrative unit, can differ significantly depending on how the forces of change interact with the social and institutional structures and ecological limits.