Towards a Three-sector Structuralist Framework: The Indian Case
Source: https://www.semanticscholar.org/paper/670708f076eb4e71486b2db69d683a286a9fdede ↗
The paper's insight — that GDP growth can diverge from formal employment creation — points to a fundamental misalignment between how we measure economic progress and how economies actually organize work.
The proposed three-sector framework (agriculture, unorganised, organised) cuts across traditional industry classifications to focus on the institutional structure of work itself.
For product directors this matters because digital products increasingly operate across these structural boundaries: platforms that connect informal workers, tools that help unorganised sectors access formal markets, or services that blur the line between employment and gig work.
The Indian case study provides a concrete example of how technology adoption and economic growth can reshape the boundary between formal and informal organization — exactly the kind of structural transformation that product strategy needs to anticipate rather than assume away.
Central argument
Azad and Sinha argue that standard two-sector or industry-based economic frameworks obscure the structural dynamics of employment in developing economies. They propose a three-sector model — agriculture, unorganised, and organised — defined by the institutional nature of work rather than by output type, and use the Indian case to demonstrate that robust GDP growth can coexist with stagnant or declining formal employment creation. The central finding is that economic expansion driven by the organised sector does not automatically pull workers out of the unorganised sector, challenging trickle-down assumptions embedded in conventional growth metrics.
Critique
The framework's explanatory power rests heavily on the Indian case, and it is not yet clear whether the three-sector boundary conditions hold in economies with different colonial histories, labour law regimes, or urbanisation patterns — the authors risk building a structuralist universal out of a singular institutional context. There is also a tension left unresolved: by defining sectors through institutional characteristics rather than output, the model may struggle to track the growing population of workers who simultaneously straddle all three categories, such as a smallholder farmer who also does platform gig work, which is precisely the boundary condition the framework is meant to illuminate.
Why it matters for product
Product directors building platforms that connect informal labour to formal markets — gig economy tools, rural fintech, SME digitisation products — are implicitly making bets about which side of the organised/unorganised boundary their users occupy and how sticky that boundary is; Azad and Sinha's model gives that intuition an analytical spine. More concretely, the finding that GDP growth decouples from formal employment creation warns against using macroeconomic tailwinds as a proxy for addressable market growth: a rising Indian middle class in aggregate does not guarantee that the unorganised-sector users a product depends on are gaining purchasing power or institutional stability at the same rate.