Economic growth occurs continuously can cause changes in the structure of the regional economy. Structural transformation means a process of structural change in the economy from agriculture to industry and services sectors, where each sector will undergo a transformation process that is different.
FACTORS CAUSE STRUCTURAL TRANSFORMATION.
As for some of the factors contributing to the transformation of the economy, namely, the first caused by human nature in their consumption activities. In accordance with the Law of Engels that the higher the income of the people, then the less the proportion of income used to buy agricultural materials, otherwise the proportion of income that is used to purchase goods industrial production becomes larger. Thus the role of the industrial sector will be greater than the agricultural sector. Second, changes in the economic structure caused also by technological changes that take place continuously. Structural transformation process will run faster if there was a shift towards domestic demand pattern of manufacturing industry output amplified by similar changes in the composition of foreign trade or export.
OCCURRENCE OF STRUCTURAL TRANSFORMATION.
Sukirno (2006 ) explains that , based on the undertaking of the economic sectors in the Indonesian economy is divided into three main groups :
- The primary sector , comprising agriculture , livestock , forestry , fisheries , mining and quarrying .
- Secondary sector, comprising manufacturing, electricity, gas and water, building.
- Tertiary sector , comprising trade , hotels , restaurants , transport and communications , finance , leasing and business services , other services ( including government ) .
Economic Structural Changes in the Process of Economic Development
Source: Tulus Tambunan (2001)
Seen in the Figure that the output of the primary sector contributes to the formation of the Gross Domestic Product (GDP) has narrowed while the share of Gross Domestic Product (GDP) of the secondary and tertiary sectors have increased along with the increase in national income per capita. Thus, economic transformation showed a shift of economic activity from the traditional economy into a modern interconnected economy.
Examples of Structural Transformation
From the beginning we see most of the people who live in rural areas to work as a farmer, but now many who make the shift from rural to urban areas and worked in various manufacturing and service companies.
In economic transformation, there are several stages or economic processes, namely:
- The process of accumulation
Process of resource utilization in order to increase production capacity in line with the increase of income percapita of a country
Two main indicator is the increase in expenditure per GDP Education and School enrollment ratio increased both enrollment rate of primary, secondary and tertiary.
I think Indonesia is not yet ready for labor or labor Indonesia will face problems in dealing with ASEAN COMMUNITY 2015.
Labor issues in the country faces three major problems, namely
3. Please elaborate, how urbanization impact on structural transformation? What is the most important factor of production in this process? (max. 500 words)
Urbanization is the movement of people from rural to urban. Urbanization due to the increasing needs of rural consumption, but the resources in the village itself is not able to meet the needs of the community. Therefore, much rural society who go to the city. People who had been a farmer in the city they work in the industry, either as workers or others. This process will automatically change the structural transformation in Indonesia. Where the supply of the economy of the agricultural sector declined while of manufacturing sector increased by leaps and bounds. Since most of the farmers in the village have gone to town. And the city they work in sectors manufacture.
People who do the urbanization of the city to be indirect labor inputs for manufacture. So the industry demand for labor can be met. The more labor will increase the production industry. And an increase in auto production workers will get a bigger income as well. So the economic standard of the people could be increasing.
4. Why low and middle income economy usually have bigger gap in income distribution? Please explain
Low and middle income economy usually have bigger gap in income distribution because too many expenses incurred rather than on income is not sufficient to be distributed evenly across the area, causing the distribution of income distribution. The main cause is the lack of proper economic development targets and structural development at the expense of other sectors. The gap also caused by : The middle income have more strong production factor than low income class. And the differentiation of knowledge and information between middle and low income make more significant of GAP.
- The process of allocation
- the process of distribution
I think Indonesia is not yet ready for labor or labor Indonesia will face problems in dealing with ASEAN COMMUNITY 2015.
Labor issues in the country faces three major problems, namely
- Limited employment opportunities. This is because economic growth has not been able to absorb the labor force into the labor market and the number of unemployed who have been there.
- Low quality of the labor force. Based on BPS data in August 2013, the low quality of the labor force as indicated by the estimated composition of the labor force, which is mostly down to the elementary school education, which still reached 52 million people, or 46.95 percent.
- Persistently high levels of unemployment. Based on BPS data, the open unemployment rate in Indonesia in August 2013 reached 6.25 percent in February 2013, an increase of 5.92 per cent recorded in August 2012 and that by 6.14 percent.
Urbanization is the movement of people from rural to urban. Urbanization due to the increasing needs of rural consumption, but the resources in the village itself is not able to meet the needs of the community. Therefore, much rural society who go to the city. People who had been a farmer in the city they work in the industry, either as workers or others. This process will automatically change the structural transformation in Indonesia. Where the supply of the economy of the agricultural sector declined while of manufacturing sector increased by leaps and bounds. Since most of the farmers in the village have gone to town. And the city they work in sectors manufacture.
People who do the urbanization of the city to be indirect labor inputs for manufacture. So the industry demand for labor can be met. The more labor will increase the production industry. And an increase in auto production workers will get a bigger income as well. So the economic standard of the people could be increasing.
4. Why low and middle income economy usually have bigger gap in income distribution? Please explain
Low and middle income economy usually have bigger gap in income distribution because too many expenses incurred rather than on income is not sufficient to be distributed evenly across the area, causing the distribution of income distribution. The main cause is the lack of proper economic development targets and structural development at the expense of other sectors. The gap also caused by : The middle income have more strong production factor than low income class. And the differentiation of knowledge and information between middle and low income make more significant of GAP.
