Structural Change Flashcards
Sugma
Structural change definition
Process of change in the pattern of production and consumption in an economy over time
Results of structural change
Results in products, processes of production, and even industries disappearing while others emerge
What does structural change actually mean
Means different growth rates are experienced within different industries over time and employment in these industries also change over time
When has structural changed actually occurred
The change needs to be sustained not just as a result of changes in the business cycle
How does structural change occur
Result of the economy shifting resources to where they are most valued
Where can structural change occur
Across industries, within industries, at the level of the firm, or across the states
Speed of structural change
Occurs with varying speed and intensity and is a result of the forces driving it
eg of slow vs fast structural change
Slow: Ageing population, rising education attainment
Fast: Innovation, policy decisions
Structural change in Australia
Following similar trends in the rest of the world
4 measurements of structural change
Output- share and growth
Changing investment
Employment- Share and growth
Exports
Output and 3 things it’s concerned with
Changing share/growth between output of sectors of the economy
Changing share/growth between firms in an industry
Changing share/growth between output of states
Changing investment levels
Between sectors
Between firms in an industry
Employment- Share and growth
Between sectors
Between firms
Between states
Exports
Analysis of the changing structure of the composition of our exports
Composite structural change indices
An indice that measures structural change as a single unit that combines the 4 measurements
2 causes of structural change
Market and government included causes
Define market included
Caused by changing consumption and production patterns
What is in market included (6)
Change in consumption patterns Tech developments Resourse depletion Globalisation Growth in asia Demographic
Change in consumption patterns (3)
Increase in service consumption (edu,travel.health)
Rising real income (40% goods and 60% services)
Health conscious society
Tech Developments
Internet-, cheaper products, e-commerce: services can be traded
Resource depletion and discovery
Rising concerns for the environment
Globalisation(3)
Increase in trade intensity
Foreign investment in mining
Supply chains
Growth in Asian markets (3)
Outsourcing of labour means reduction in Aus manufacturing
Rising incomes in China- increased demand for services
Low skilled jobs move offshore-call centres
Demograhic factors (3)
Increased labour force participation rate- need for household services
Aging pop- rise in health care
Changing structure of family- rise in HH services
Gov Induced: Supply side policies (4)
Tarrif reductions
Tax reforms
Privatisation of telstra and quantas
Competition policy
4 positive effects of structural change
Efficiency
Policy implications
Skillsets
Shocks
Efficiency
Increase in in allocative,productive,dynamic and intemporal
Intemporal efficiency
Enabling businesses to grow at this current point without comprimising the ability of firms in the future to meet their needs and wants
Policy implications
To address structural transitions as the government may need to readjust their policy focus- such as supply side policy to improve efficiency
Skillsets
Helps skill workers and creates a greater desire for a workerforce with problem solving and critical thinking
Shocks
Increased ability to handle shocks as their is a broader more balanced economy
4 Negative effects of change
Structural unemployment
Income distribution
Policy complexity
Government lag
Structural U/E defo
resulting from the mismatch of supply to demand fro albour
S U/E caused by
Outsourcing, mergers and acquisituions
Effects of S U/E
Increase in welfare payments
Less tax revenue
More education and training
Income distribution
A degree of income distribution imbalance between some industries and regions
Policy complexity
laws, regulations become increasingly complex
Gov lag
As new industries/products/services emerge laws and governance may lag
EG and structural change
requires both new activities and ongoing structural change
What does SC allow for in terms of EG
Economies can move from Subsistence to emerging to developing to developed
Relationship between EG and SC
EG requires sc and when growth occurs it stimulates SC
Example of Output measurement
Rise in financial and insurance services
Example of changing I levels measurement
Large decline in mining investments
EG of employment levels measurement
Over 500 000 jobs created in household services
3 structural changes from 2007-2019
Rapid increase in consumption of services
WA State share of output decreased
Mining industry share of output increased
2 structural change in mining
Long term increase in commodity prices has increased the value of output
Industrilisation and urbanisation in china has increased exports
2 structural change in agriculture
Growth in urbanisation has meant individuals have moved away from agricultural sectors
Change in consumer demands for more processed foods
2 structural change in services
Growing export market in education services
Healthcare undergoing large increases due to aging population and more health conscious customers
