Rising Contribution Of Tertiary Sectors To Economic Growth In India | Shri Prakash, Gautam Negi & Sudhi Sharma

Conventional theory envisages structural change as propeller of economic growth. Primary production dominates economic structure in the early stage. Growth warrants transfer of resources from low productivity primary production to high productivity secondary sectors. At the mature stage, resources are transferred from secondary to tertiary sectors (Lewis, 1962, Clark, Colin, 1958, Rostow, 1965). The theory overlooks change in technology as a road-map to growth, though it seems to take cognizance of technological differences to be the base of productivity differentials among different sectors of the economy. In dynamic growth, changes in economic structure and technological changes reinforce each other and productivity increases across sectors. Growth of productivity, involving shifts in production function upwards to the right, nurtures and sustains long run growth. So, transfer of resources ceases to be the harbinger of growth. This study focuses on (i) configurations of changing contribution of tertiary sectors in a dynamic state of (a) technological up-gradation of production base and growing final demand for services; and (ii) growth effect of rising final demand for services independent of change in technology.