Kerala 2005 - of Planning Commission

CHAPTER 8
LOOKING AHEAD: POSSIBILITIES AND STRATEGIES
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in Kerala, both by themselves and others who have been
associated with them as a matter of ‘demonstration effect’.
These are in small and medium industries, with modern
technology and organisation, construction, trade, hotels
and restaurants, banking, entertainment industry and so
on. This perhaps explains the relatively high intensity of
mobile phones and computers in Kerala. So is the case of
carpenters, especially those who had some experience of
migration, using modern electrical equipment in their work
that helps reduce drudgery while enhancing the quality
and productivity of work. This critical mass of emigrants
has been instrumental in linking Kerala society with the
rest of the world in a variety of ways. The recent CDS
survey of households on migration (Zachariah et al 2003)
revealed that one in four households in Kerala have a direct
experience of international migration through one or more
of its members.
Besides the above-mentioned favourable factors arising
from social development, demographic transition and
the impact of international migration, an important and
compelling reason for overall technological change
and innovation is the structural transformation of the
Kerala economy. As seen in Chapter 4, at the end of the
20th century, the primary sector of the Kerala economy
accounted for only a quarter of the State domestic income
and around one-third of the employment. This means that
three-fourths of income and two-thirds of employment is
generated in the non-agricultural sectors of the economy.
In fact, the service sector is the leading sector in Kerala
with two-thirds of income and more than 40 per cent of
employment. This is also the fastest growing sector. Such
a process has raised the possibility of growth through
‘servicisation’ as opposed to ‘industrialisation’ since
Kerala is a regional economy. 5, 6 We shall return to this
question later.
are able to attract those industries where labour
productivity levels are not much different. This calls
for technological change and other forms of innovation
that will enhance the value of the products. However,
given the pressure of demand for employment, Kerala’s
political society turned its back on technological change
for quite some time, thinking that all such changes
result in job loss.
Indeed, there will be displacement of labour when
machines are introduced. At the same time, technological
change creates new jobs and new ways of doing things.
Innovation on a wide front further contributes to
employment creation and income generation. There is
no doubt that people affected by job loss have to be
taken care of by a variety of means, including social
security and/or retraining. Their employment and
employability becomes a reality only when there is the
possibility of increasing investment in the economy.
There is some change in the society’s mindset to
technological change in favour of new activities
rather than existing ones. This can result in a
lopsided and inequitous situation. While information
and communication technologies using computers
2.2 The Imperative for Technological
Change and Innovation
To provide decent jobs, productivity levels will have
to be enhanced. Given Kerala’s higher ‘social wage’
(see Chapter 6), the lack of competitiveness in labourintensive
agriculture (e.g. rice cultivation) and many
agro-processing industries is the result of the inability
to raise labour productivity. Put in a different way,
neighbouring States, with much lower level of wages,
5 Recent analysis based on endogenously determined breaks provides conclusive evidence shows that source of growth in the
1990s is mainly from services. Pushpangadan and Parameswaran (2005).
6 See Subrahmanian (2003).