Developing countries and regions go through an evolutionary process of structural and socioeconomic transformation. In its first stage of development, a country is essentially agrarian. The bulk of output originates in the agricultural sector and most of the people are employed in one way or another in agricultural and rural activities. The typical form of organization during this stage is the family farm, and the prevailing technology tends to be traditional and highly labor-intensive.
As the economy starts to grow, two endemic forms of dualism begin to appear, confronting (1) the established rural areas with new urban areas, and, (2) traditional (labor-intensive) technology with modern (capital-intensive) technology and family enterprises with corporate forms of organization.
Gradually, during an intermediate development phase, the economy's center of gravity moves away from agriculture toward industry and the service sector; modern technology and corporate forms of organization tend to replace traditional technology and family enterprises. Resources, in the form of an agricultural surplus and labor, move out of the agricultural sector. The agricultural surplus provides much of the funds needed for social overhead capital formation and the industrial takeoff mainly in the urban areas. In turn, workers released from agriculture seek jobs in nonagricultural activities which are located mainly in the urban areas as well.
Finally, when a country has reached a mature development phase and has become industrialized, a large and increasing proportion of gross domestic product (GDP) originates in industry and the service sector, and most of the labor force is employed in these sectors.