The structural change It is the set of changes in different aspects of the economy, such as the sectoral composition of employment and production, the industrial and financial organization, the distribution of income and wealth, political institutions, demography, and even the value system of the society.
In the history of economic development, structural change is understood as the different adjustments of productive activity in the economy. It can also be a big change in the way an industry or a market performs, usually caused by important economic developments..
This kind of change modifies the paradigms used to determine courses of action, for example by changing the way market orders are processed. One of the main drivers of structural change is innovation.
Areas of the economy with large research and development components could have a large impact on the existing methodology. Not only will companies have to adapt to the new order, so will the markets.
Article index
The absence of a general theory that explains structural change in the economy, makes scholars in this field of economic development summarize the concept using three characteristics, as observed in several empirical studies, as follows:
The most valued and frequently observed characteristic is the increase in the share of modern sectors of the economy (industry, services, technology) in the total gross domestic product, which is associated with the fall in the share of agriculture.
The percentage of the total labor force that works in the agricultural sector decreases, while in the modern economic sectors it increases.
This is due to the migration of the labor force to the urban area from the rural area, which means that the center of the national economy shifts from the rural areas to the cities. Therefore, the degree of urbanism increases significantly.
However, the concept of structural change has recently been expanded by different researchers, trying to explain this type of change by observing the growth of labor productivity within a sector and between sectors..
- Global changes in capital and labor reserves.
- New economic developments.
- Due to changes in the supply and demand of all resources.
- Changes in resource availability due to wars or natural disasters.
- Changes in the political landscape with the coming to power of a new regime or major reforms in existing laws, especially with respect to business regulation and taxation.
The arrival of this electronic device was a big change for both consumers and companies.
This was due to the fact that certain products saw their demand decrease, such as flashlights and cameras, because their functionality was available to everyone as part of a compact device whose main use was something else.
This led to the development of all-purpose applications, including tracking a bank or business account, finding information, and making purchases..
In the futures market, crude oil for future delivery is generally more valued than spot oil today.
If there are production cuts, either by decree of the producing countries or political instability in the producing regions of the world, fears of low reserves will arise. So the oil market may undergo a structural change.
Short-term demand for oil may increase, as people will fear lower levels of supply in the future. Consequently, the market may shift into a reversal, where oil today is more valuable than oil tomorrow..
The emergence and diffusion of essential innovations has a profound structural impact on the economy. These technological innovations completely change the sectoral composition of the economy.
The key sectors associated with the new technological systems increase slowly as the paradigm develops, and those key sectors associated with the older technologies see their influence diminish at the same time..
Thus, one can see the relative increase and decrease of iron, steel, plastic and information or, in the field of energy systems, of hydraulic energy, steam energy, electricity and fossil fuels..
In politics, structural changes are considered as the entire process of transition from one regime to another. Changes of government occur, in democracy, when the results of the elections are given.
The change of the political structure in its entirety occurs when the governorships, mayors and the president's command cabinet are changed. Senates and Congresses are perfect examples of structural changes in the medium term.
The coronavirus pandemic has changed several aspects of the economy and society that are likely to be maintained in the long term, therefore it is considered a structural change.
The conjunctural changes happen right at the moment, they do not have a progressive growth like the structural ones. In fact, they often occur in response to events that cause a disturbance..
The conjunctural change could be defined as any change that seeks a specific modification of a system in the short term, while structural changes tend to be much larger and occur in the long term..
Structural change becomes a collective phenomenon, since it must cause a transformation of the social organization in some of its components or in its entirety. It is identified in time, that is, from a point of reference in the past.
It must be possible to observe that there is a change, on what it is based and on what magnitude it has occurred. In addition, it must affect the course of history and have a certain permanence.
On the other hand, the conjunctural change is also called an alteration of the equilibrium, because it consists of trying to correct the condition of imbalance faced by some of the parts of the system, but without this implying important variations in the total system..
Structural change occurs when social relations are modified, significantly influencing the interaction components between the entities that make up society, without their existence being put at risk..
The change of an economic system or a government regime can be examples of structural changes.
Supporters of structural functionalism argue that change is intrinsic to social systems, but it must occur gradually and stable.
Although the original stability suffers alterations, a new equilibrium point tends to be established with the application of integrating elements that seek to correct these modifications, to ensure the stability of the system..
For example, structural change manifests itself when moving from an agricultural society to another that is industrial.
On the other hand, the conjunctural change is shown at a certain moment, when the social conditions that are needed for it to happen come together, this being the result of something that is not working in the social structure, affecting its stability externally.
When this change occurs as a consequence of the dynamics of the social system, it tends to repeat itself with a certain frequency. An example is the economic crisis, generating a lack of employment opportunities and poverty..
Yet No Comments