What Is Structural Change?

Structural change refers to a dramatic shift in the way an industry or market🎉 functions, usually ♊brought on by major economic developments.

Structural change can be driven by a range of factors, including the advent of technology, geopolitical conflict, natural disasters, and more. Participants🥀 in an e🌜conomy including workers, businesses, and consumers respond to structural change by trying to adapt to profoundly new circumstances, sometimes with great difficulty.

Understanding Structural Change

In economics, structural change is a shift in how systems operate. When i🥂t occurs, the baseline assumptions that participants use to determine their actions may need to be re-evaluated.

One major driver of structural change is innovation. Other factors that can often spark structural change include new economic developments, global shifts in the pools of capital and labor, and changes in resource availability due to war or a natural disaster. Structural change may also be affected by changes in the 澳洲幸运5官方开奖结果体彩网:supply and demand of resources and changes in the political landscape. This may look like a new political regime coming to power or major overhauls in existing laws, especially with regard to business ⛦regulation and taxation.

Adapting to Structural Change

Not only do businesses🔜 have to adapt when💛 confronted with structural change, but so do markets themselves.

For example, in the 澳洲幸运5官方开奖结果体彩网:futures market, crude oil is usually in contango, which means that oil for delivery in the future is more valued than spot oil is today. If there are production cutbacks, either by decree from producing countries or political instability in the producing regions of the word, fears of scarce reserves will arise. The oil market may then undergo a structural change. Demand for near-term oil may increase, as people would fear lower supply levels in the future. Consequently, the market may shift to 澳洲幸运5官方开奖结果体彩网:backwardation, where oil today is more valuable than future oil.

Technology and Structural Change

Technology is a major driver of structural change. Consider food production, for instance. Advancements in ▨farming 🐟technology led to the rise of industrial agriculture.

In the 21st century, leaps in technology have also driven structural changes in 澳洲幸运5官方开奖结果体彩网:service industries. The proliferation of online shopping, self-ordering kiosks in fast food🌜 restaurants, and voice-operated devices all indicatಞe a profound shift in how the economy operates, with ramifications for workers, businesses, and consumers.

Structural change can also be driven by social events. The proliferation of 澳洲幸运5官方开奖结果体彩网:labor unions has led to changes in working standards, which may push companies to adapt the way they produce and price goods and service💞s.

On a country level, structural changes in productivity coꦫuld transform an economy from a developing nation to an emerging nation to a developed nation. Technical progress is seen as crucial in bringing about structural change as it can usher in the obsolescence of some skills and vocations while leading to permanent changes in spending and production.

Example of Structural Change

The smartphone is one of the most evident examples of structural change. The development and widespread adoption of it represented a huge change for both bu𒈔sinesses and consumers.

For products such as flashlights and cameras, demand waned significantly as their functionality became readily ava💟ilable to everyone as part of an accessible, compact device. This occurred even those the primary use of the smar💞tphone was not necessarily for lighting or photography.

The advent of tꦉhe smartphone also🌸 led to the development of the applications (or apps, for short) industry. Today, there is virtually an app for every function, from monitoring bank accounts to engaging in commerce and conducting research.

The Bottom Line

Structural change refers to major shifts in how economies operate. They are typically trigg🅰ered by 🌼technological advancements or economic shocks. Natural disasters and conflict can also produce structural change.

When structural cꦚhanges take place, the ramifications are felt acrossꦿ an economy, from workers to businesses and even to those governing.