The document discusses economic structural changes that occur during development. It defines structural changes as long-term shifts in the composition of economic sectors, such as the rise of manufacturing and services and decline of agriculture and industry over time. Countries experience rapid structural transformation as they industrialize, exemplified by many developing nations in Asia and Latin America that grew their manufacturing sectors. However, structural changes differ across countries depending on factors like endowments and history. More recently, the service sector has become dominant globally as the role of agriculture and manufacturing declines.

1. EconomicEconomic
DevelopmentDevelopment
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Structural ChangesStructural Changes

2. Economic Development & Structural ChangesEconomic Development & Structural Changes
What do you mean by Structure?What do you mean by Structure?
“…“…. the different arrangements of productive activity in. the different arrangements of productive activity in
the economy and different distributions ofthe economy and different distributions of
productive factors among various sectors of theproductive factors among various sectors of the
economy, various occupations, geographic regions,economy, various occupations, geographic regions,
types of product,etc …”types of product,etc …”
(Machlup, 1991: 76 in Silva and Teixeira, 2008: 275).(Machlup, 1991: 76 in Silva and Teixeira, 2008: 275).
Silva E. G. and A.C. Teixeira, 2008, “Surveying structural change:Silva E. G. and A.C. Teixeira, 2008, “Surveying structural change:
Seminal contributions and a bibliometric account,” Structural ChangeSeminal contributions and a bibliometric account,” Structural Change
and Economic Dynamics 19.and Economic Dynamics 19.

3. Economic Development & Structural ChangesEconomic Development & Structural Changes
What do you mean by Structure?What do you mean by Structure?
“…“…. the different arrangements of productive activity in. the different arrangements of productive activity in
the economy and different distributions ofthe economy and different distributions of
productive factors among various sectors of theproductive factors among various sectors of the
economy, various occupations, geographic regions,economy, various occupations, geographic regions,
types of product,etc …”types of product,etc …”
(Machlup, 1991: 76 in Silva and Teixeira, 2008: 275).(Machlup, 1991: 76 in Silva and Teixeira, 2008: 275).
Silva E. G. and A.C. Teixeira, 2008, “Surveying structural change:Silva E. G. and A.C. Teixeira, 2008, “Surveying structural change:
Seminal contributions and a bibliometric account,” Structural ChangeSeminal contributions and a bibliometric account,” Structural Change
and Economic Dynamics 19.and Economic Dynamics 19.

4. Economic Development & Structural ChangesEconomic Development & Structural Changes
What do you mean by Structural Changes?What do you mean by Structural Changes?
Long-term and persistent shifts in the sectoralLong-term and persistent shifts in the sectoral
composition of economic systemscomposition of economic systems
Modifications in the relative importance of differentModifications in the relative importance of different
sectors over time, measured by their share ofsectors over time, measured by their share of
output or employment.output or employment.
Changes in the location of economic activity, suchChanges in the location of economic activity, such
as the urbanisation process, or in a broaderas the urbanisation process, or in a broader
sense, changes in the institutional environment.sense, changes in the institutional environment.

5. Economic Development & Structural ChangesEconomic Development & Structural Changes
What do you mean by Structural Changes?What do you mean by Structural Changes?
Innovation was the essential force leading to structuralInnovation was the essential force leading to structural
economic shiftseconomic shifts
--Schumpeter, 1939Schumpeter, 1939
““structural changes . . . are required, without which modernstructural changes . . . are required, without which modern
economic growth would be impossible”economic growth would be impossible”
-Kuznets, 1971-Kuznets, 1971
Economic growth is linked to continuous structuralEconomic growth is linked to continuous structural
transformation and change.transformation and change.
-Pasinetti, 1981-Pasinetti, 1981

6. Economic Development & Structural ChangesEconomic Development & Structural Changes
What do you mean by Structural Changes?What do you mean by Structural Changes?
An economic condition that occurs when an industry orAn economic condition that occurs when an industry or
market changes how it functions or operates.market changes how it functions or operates.
A structural change will shift the parameters of an entity,A structural change will shift the parameters of an entity,
which can be represented by significant changes over awhich can be represented by significant changes over a
period of time.period of time.
Thus structural change can alter past trends or theories.Thus structural change can alter past trends or theories.

7. Economic Development & Structural ChangesEconomic Development & Structural Changes
The rise of new economic powers hasThe rise of new economic powers has
generally been driven by the rapid structuralgenerally been driven by the rapid structural
transformation of their economies, featuredtransformation of their economies, featured
by the shift from primary production, such asby the shift from primary production, such as
mining and agriculture to manufacturing;mining and agriculture to manufacturing;
and in manufacturing from natural-resource-and in manufacturing from natural-resource-
based to more sophisticated, skill- andbased to more sophisticated, skill- and
technology-intensive activities.technology-intensive activities.

8. Economic Development & Structural ChangesEconomic Development & Structural Changes
With urbanisation, labor-intensiveWith urbanisation, labor-intensive
manufacturing activities grow faster thanmanufacturing activities grow faster than
primary activities, generating new jobs,primary activities, generating new jobs,
income and demand.income and demand.
Capital accumulation leads to a moreCapital accumulation leads to a more
sophisticated manufacturing structure andsophisticated manufacturing structure and
the economy gradually moves to skill- andthe economy gradually moves to skill- and
technology-intensive sectors.technology-intensive sectors.

9. Economic Development & Structural ChangesEconomic Development & Structural Changes
Since 1945, developing economies haveSince 1945, developing economies have
gradually become involved in thegradually become involved in the
industrialisation process with theirindustrialisation process with their
manufacturing sector growing faster thanmanufacturing sector growing faster than
mining and agriculture.mining and agriculture.
Different endowments of productive factors,Different endowments of productive factors,
specific historical and geographicalspecific historical and geographical
conditions, all contribute to the greatconditions, all contribute to the great
diversity of development paths acrossdiversity of development paths across
countriescountries

10. Economic Development & Structural ChangesEconomic Development & Structural Changes
Latin America benefited from early entry intoLatin America benefited from early entry into
the industrialisation process, with somethe industrialisation process, with some
countries pursuing import substitutioncountries pursuing import substitution
policies already in 1930s.policies already in 1930s.
Many Latin American economies experiencedMany Latin American economies experienced
sustained economic growth until thesustained economic growth until the
beginning of 1980s, when their industrialbeginning of 1980s, when their industrial
output started decreasing.output started decreasing.

11. Economic Development & Structural ChangesEconomic Development & Structural Changes
Among Asian economies, Japan representsAmong Asian economies, Japan represents
the first mover in the industrialisationthe first mover in the industrialisation
process.process.
From the 1960s newly industrialisedFrom the 1960s newly industrialised
economies (NIEs), such as Republic ofeconomies (NIEs), such as Republic of
Korea, Taiwan province of China, HongKorea, Taiwan province of China, Hong
Kong and Singapore, have followed its path.Kong and Singapore, have followed its path.

12. Economic Development & Structural ChangesEconomic Development & Structural Changes
In most cases, these countries rapidly changed theirIn most cases, these countries rapidly changed their
industrial structure, moving from low-skilled to moreindustrial structure, moving from low-skilled to more
sophisticated production.sophisticated production.
In the last twenty years, the rise of China as one of theIn the last twenty years, the rise of China as one of the
largest manufacturing producers in the world,largest manufacturing producers in the world,
currently making up for around 10 per cent of worldcurrently making up for around 10 per cent of world
value added, represents the most strikingvalue added, represents the most striking
phenomenon in the region.phenomenon in the region.
In contrast, most African countries still remain on theIn contrast, most African countries still remain on the
margins of the industrialisation processes.margins of the industrialisation processes.

13. Economic Development & Structural ChangesEconomic Development & Structural Changes
Different trends are observed since the 1970s.Different trends are observed since the 1970s.
The service sector has become the dominantThe service sector has become the dominant
economic activity, while the role of agriculture andeconomic activity, while the role of agriculture and
manufacturing has declined.manufacturing has declined.
Timmer and Akkus (2008) consider this as a naturalTimmer and Akkus (2008) consider this as a natural
developing process, a “powerful historical pathwaydeveloping process, a “powerful historical pathway
of structural transformation,” which leads everyof structural transformation,” which leads every
country to move from agriculture to industry andcountry to move from agriculture to industry and
then to services.then to services.