“Structure transformation is the shift of resources from agriculture to industries. Higher productivity to lower productivity sectors is the essence of economic growth and employment generation”
Small countries like Samoa are being encouraged to invest more in manufacturing as a way to tackle a number of its economic problems.
The call comes from the United Nations Industrial Development Organisation (U.N.I.D.O) Director of Research and Statistics Branch, Dr. Ludovico Alcorta.
The top official was in Samoa for the S.I.D.S conference, which attracted more than 4,000 delegates to the country.
Speaking to the Samoa Observer, Dr. Alcorta says investing in manufacturing as a way to develop and promote exports is extremely vital.
“Structure transformation is the shift of resources from agriculture to industries,” he said.
“Higher productivity to lower productivity sectors is the essence of economic growth and employment generation.”
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According to the U.N.I.D.O Director, employment generation happens when resources are appropriately used and turned into better opportunities. That’s what generates economic growth.
“Manufacturing industries bring more opportunities for rapid growth than any other sector, especially for low developing countries,” he said.
There are some exceptions but in large, that is true.
“It provides additional opportunities for growth than other sectors because you are moving people for money from low productivity to high productivity [areas].”
When people are moved for money from low productivity to high productivity people produce more, therefore that enriches a country, he said.
“Secondly as people produce more per head, that allows them to have higher wages.
“At the same time, it saves more money and that helps the whole economy because you can consume more and invest more and thirdly manufacturing as a lot of sharing of skills and languages.”
Dr. Alcorta said that as people learn from one factory and move to another factory, they take with them the skills learnt and they would use it for life.
“This creates better linkages.”
For example, he said while fish processing companies buy fish, they bring other enormous opportunities such as insurance and a number of additional economic activities.
“It buys more than other sectors and so generates more economic growth.”
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