Industrialisation

Abstract

It is a common observation that rich countries tend to be industrialised. Colin Clark noted nearly half a century ago that as aggregate growth proceeds the share of output and employment in agriculture falls while the share of output and employment in industry (and in services) rises¹. A quarter of a century later Simon Kuznets refined this observation by detecting broad regularities in the sectoral composition of output and employment and the level of per capita income². Using data from the developed countries Kuznets claimed that as income per head rose, the contribution of agriculture to total output declined in a predictable way, while the contribution of services remained roughly constant and the contribution of manufacturing rose. Looked at in terms of employment, Kuznets’ data indicated that as per capita income rose, the proportion of the labour force engaged in agriculture fell while the proportions engaged in services and manufacturing increased, although the rise in manufacturing was not as pronounced as in services.