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In economics, economic transformation refers to the continuous process of moving labour and other resources from lower- to higher-productivity sectors and raising within-sector productivity growth. As such, economic transformation emphasises the movement from low- to high-productivity activities within and across all sectors. This movement of resources from lower- to higher-productivity activities is a key driver of economic development.
Within-sector productivity growth entails the adoption of new technologies and management practices that increase the efficiency of production. It can come about as a result of the increased efficiency of existing firms or as a result of the reallocation of resources away from the least productive firms towards more productive firms.