Structural Change Flashcards by Charlie Morfesse

Structural change definition

Process of change in the pattern of production and consumption in an economy over time

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Results of structural change

Results in products, processes of production, and even industries disappearing while others emerge

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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

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When has structural changed actually occurred

The change needs to be sustained not just as a result of changes in the business cycle

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How does structural change occur

Result of the economy shifting resources to where they are most valued

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Where can structural change occur

Across industries, within industries, at the level of the firm, or across the states

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Speed of structural change

Occurs with varying speed and intensity and is a result of the forces driving it

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eg of slow vs fast structural change

Slow: Ageing population, rising education attainment
Fast: Innovation, policy decisions

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Structural change in Australia

Following similar trends in the rest of the world

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4 measurements of structural change

Output- share and growth
Changing investment
Employment- Share and growth
Exports

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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

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Changing investment levels

Between sectors

Between firms in an industry

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Employment- Share and growth

Between sectors
Between firms
Between states

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Exports

Analysis of the changing structure of the composition of our exports

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Composite structural change indices

An indice that measures structural change as a single unit that combines the 4 measurements

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2 causes of structural change

Market and government included causes

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Define market included

Caused by changing consumption and production patterns

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What is in market included (6)

Change in consumption patterns 
Tech developments 
Resourse depletion 
Globalisation 
Growth in asia 
Demographic

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Change in consumption patterns (3)

Increase in service consumption (edu,travel.health)
Rising real income (40% goods and 60% services)
Health conscious society

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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

Structural Change Flashcards

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