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]
Historically, structural change has not always been strictly for the better. The division of Korea and the separate paths of development taken by each state exemplifies this. Korea under Japanese rule was relatively uniform in economic structure, but after World War II, the two countries underwent drastically different structural changes due to drastically different political structures. [8]
South Korea's economy before the 1950s mostly consisted of agriculture. During the 1960s and 1970s, Korea began to change their structure to IT, micro systems technology, and also services. More than 50% of the world uses a Samsung smartphone, whose headquarters are located there. Today, South Korea's economy is the 15th strongest economy system.
In the Ruhr Area (Ruhrgebiet) in Germany, the economy was mostly marked by coal and steel industry. During and after the coal crisis began in the 1960s and 1970s, this area started to change its economic structures to services, IT and logistics. The city Dortmund opened the first technology center named "Technologiepark Dortmund" in the 1980s. Companies including Signal Iduna and Wilo are based there.
Structural change can be initiated by policy decisions or permanent changes in resources, population or the society. The downfall of communism, for example, is a political change that has had far-reaching economic implications.
Economic structural changes impact also on employment. A developing economy typically reveals a high share of employment in the primary sector, while the share of employment in the tertiary sector is high in an advanced/developed economy.
Structural change tests are a type of econometric hypothesis test. They are used to verify the equality of coefficients across separate subsamples of a data set.
The Tertiary sector of the economy, generally known as the service sector, is the third of the three economic sectors of the three-sector theory,. The others are the secondary sector, and the primary sector.
The primary sector of the economy includes any industry involved in the extraction and production of raw materials, such as farming, logging, hunting, fishing, forestry and mining.
Import substitution industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. The term primarily refers to 20th-century development economics policies, but it has been advocated since the 18th century by economists such as Friedrich List and Alexander Hamilton.
Economic geography is the subfield of human geography which studies economic activity and factors affecting them. It can also be considered a subfield or method in economics. There are four branches of economic geography. There is, primary sector, Secondary sector, Tertiary sector, & Quaternary sector.
Industrialisation is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an economy for the purpose of manufacturing. Historically industrialization is associated with increase of polluting industries heavily dependent on fossil fuels; however, with the increasing focus on sustainable development and green industrial policy practices, industrialization increasingly includes technological leapfrogging, with direct investment in more advanced, cleaner technologies.
In sociology, the post-industrial society is the stage of society's development when the service sector generates more wealth than the manufacturing sector of the economy.
Rostow's stages of economic growth model is one of the major historical models of economic growth. It was published by American economist Walt Whitman Rostow in 1960. The model postulates that economic growth occurs in five basic stages, of varying length:
Structural adjustment programs (SAPs) consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their purpose is to adjust the country's economic structure, improve international competitiveness, and restore its balance of payments.
A transition economy or transitional economy is an economy which is changing from a centrally planned economy to a market economy. Transition economies undergo a set of structural transformations intended to develop market-based institutions. These include economic liberalization, where prices are set by market forces rather than by a central planning organization. In addition to this trade barriers are removed, there is a push to privatize state-owned enterprises and resources, state and collectively run enterprises are restructured as businesses, and a financial sector is created to facilitate macroeconomic stabilization and the movement of private capital. The process has been applied in China, the former Soviet Union and Eastern bloc countries of Europe and some Third world countries, and detailed work has been undertaken on its economic and social effects.
The term information revolution describes current economic, social and technological trends beyond the Industrial Revolution. The information revolution was enabled by advances in semiconductor technology, particularly the metal–oxide–semiconductor field-effect transistor (MOSFET) and the integrated circuit (IC) chip, leading to the Information Age in the early 21st century.
Development theory is a collection of theories about how desirable change in society is best achieved. Such theories draw on a variety of social science disciplines and approaches. In this article, multiple theories are discussed, as are recent developments with regard to these theories. Depending on which theory that is being looked at, there are different explanations to the process of development and their inequalities.
The Japanese economic miracle is known as Japan's record period of economic growth between the post-World War II era to the end of the Cold War. During the economic boom, Japan rapidly became the world's second largest economy. By the 1990s, Japan's demographics began stagnating and the workforce was no longer expanding as it did in the previous decades, despite per-worker productivity remaining high.
The Korea Development Institute (KDI) is a Korean government agency established in 1971 to conduct policy research. KDI has conducted research on a broad range of economic and social issues, including macroeconomics policy, fiscal policy, and labor.
The flying geese paradigm is a view of Japanese scholars regarding technological development in Southeast Asia which sees Japan as a leading power. It was developed in the 1930s, but gained wider popularity in the 1960s, after its author, Kaname Akamatsu, published his ideas in the Journal of Developing Economies.
An economy is an area of the production, distribution and trade, as well as consumption of goods and services by different agents. In general, it is defined 'as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of scarce resources'. A given economy is a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. In other words, the economic domain is a social domain of interrelated human practices and transactions that does not stand alone.
The three-sector model in economics divides economies into three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and service industries which exist to facilitate the transport, distribution and sale of goods produced in the secondary sector (tertiary). The model was developed by Allan Fisher, Colin Clark, and Jean Fourastié in the first half of the 20th century, and is a representation of an industrial economy. It has been criticised as inappropriate as a representation of the economy in the 21st century.
One classical breakdown of economic activity distinguishes three sectors:
The economic liberalisation in India refers to the economic liberalization of the country's economic policies with the goal of making the economy more market and service-oriented and expanding the role of private and foreign investment. Indian economic liberalization was part of a general pattern of economic liberalization occurring across the world in the late 20th century. Although some attempts at liberalization were made in 1966 and the early 1980s, a more thorough liberalization was initiated in 1991. The reform was prompted by a balance of payments crisis that had led to a severe recession and also as per structural adjustment programs for taking loans from IMF and World Bank.
The economic history of Morocco has largely been charted by the national government through a series of five-year plans. Centralized planning has gradually given way to moderate privatization and neoliberal economic reforms.
The East Asian model pioneered by Japan, is a plan for economic growth whereby the government invests in certain sectors of the economy in order to stimulate the growth of specific industries in the private sector. It generally refers to the model of development pursued in East Asian economies such as Japan, South Korea and Taiwan. It has also been used by some to describe the contemporary economic system in Mainland China after Deng Xiaoping's economic reforms during the late 1970s and the current economic system of Vietnam after its Doi Moi policy was implemented in 1986.
