Structural change

This article is about changes in market dynamics and economic systems. For structural change in statistical and econometric models, see Structural break.

In economics, structural change is a shift or change in the basic ways a market or economy functions or operates.[1]

Such change can be caused by such factors as economic development, global shifts in capital and labor, changes in resource availability due to war or natural disaster or discovery or depletion of natural resources, or a change in political system. For example, a subsistence economy may be transformed into a manufacturing economy, or a regulated mixed economy may be liberalized.[2] A current driver of structural change in the world economy is globalization.[3] Structural change is possible because of the dynamic nature of the economic system.[4]

Patterns and changes in sectoral employment drive demand shifts through the income elasticity. Shifting demand for both locally sourced goods and for imported products is a fundamental part of development.[5][6] The structural changes that move countries through the development process are often viewed in terms of shifts from primary, to secondary and finally, to tertiary production. Technical progress is seen as crucial in the process of structural change as it involves the obsolescence of skills, vocations, and permanent changes in spending and production resulting in structural unemployment.[4][7]

  1. ^ root. "Structural Change Definition | Investopedia". Investopedia. Retrieved 2016-03-04.
  2. ^ Etchemendy, Sebastian, Models of Economic Liberalization: Regime, Power and Compensation in the Iberian-American Region (2009). APSA 2009 Toronto Meeting Paper. Available at SSRN: http://ssrn.com/abstract=1449085
  3. ^ Sharp, Margaret (1980). "The challenge of long-term structural change". Futures. 12 (5): 370–385. doi:10.1016/0016-3287(80)90091-9.
  4. ^ a b Pasinetti, Luigi L. (1981). Structural Change and Economic Growth. Cambridge: Cambridge University Press. ISBN 0-521-27410-9.
  5. ^ Fisher, A (1939) Production: Primary, Secondary and Tertiary, Economic Record, June
  6. ^ Clark, C (1940) The Conditions of Economic Progress
  7. ^ Leon, P. (1967) Structural Change and Growth in Capitalism, Johns Hopkins, Baltimore