Extract B: Structural change in South Asia: 'Bypassing the factory floor'

The development trajectory of South Asian economies, particularly India, challenges the classic Lewis model of structural transformation. Instead of a sequential shift where surplus agricultural laborers move into low-cost manufacturing, growth has been heavily driven by services, including information technology, business processing, and telecommunications. While these modern service sectors have boosted GDP, critics argue they are highly skill-intensive and have not absorbed low-skilled surplus labor at the scale predicted by Lewis’s dual-sector framework, leaving many underemployed in the informal sector.