Structural Change Flashcards
What is the concept of structural change:
Structural change refers to the process of change in the pattern of production in an economy over time. Structural change results in products, processes of production, and even industries appearing and disappearing while others emerge. Structural change means that different growth rates are experienced within and between different industries over time and employment in these industries change over time.
Why does economic growth requires new activities and ongoing structural change?
- Society becomes more complex
- Subsistence to emerging to developing to developed – think China
- Economic growth requires structural change when growth occurs it stimulates structural change. There is a feedback mechanism.
Market induced structural change
Changes in consumption patterns.
Technological developments.
Globalisation
Growth in Asian Markets.
Demographic factors
Government induced structural change.
Tariff reductions – decline in manufacturing ie car industry
Services such as telecommunications have been deregulated – cheap offshore provider
Trade and investment liberalisation
Infrastructure and general government reforms,
Competition policy
Taxation reforms
Privatisation, corporatization, reregulation of GBE’s
Financial market reforms
Labour market reforms
The indicators of structural change:
- Output
- Employment
- Investment
- Exports
what are the four main sectors in the economy
agriculture, mining, manufacturing and services
In Australia what sector has significantly declined
Manufacturing
In Australia (and the world) what sector has become increasingly popular
Service based industries
Which states have recently experienced an increase in market share
WA and QLD
Why has manufacturing declined and services risen?
Globalisation
capital-intensive manufacturing is moved offshore,
As incomes in Australia have risen, coupled with the rise of the internet and technological services.
Services have risen due to:
increase in technology and incomes.
Australians are more concerned about our health
the rise in business services.
Government focus on innovation
Demographic changes.
Effects of Structural Change:
changes in output
structural unemployment
Job losses
job creation
Other implications of structural change.
- Production implications
- Efficiency Implications
- Policy Implications – supply side
- Income implications
