Structural Change - Meaning & Definition

Published by MBA Skool Team, Last Updated: February 17, 2015

What is Structural Change?

Structural Change refers to a deep and impactful change that completely alters the way an organization functions: the change in the flow of authority, capital information and responsibility in the organization. A structural change in an organization shifts the entity’s parameters, which are identified through the previous changes in the historical data of the company.

Economic structural change is a long term shift in the fundamental structure of an economy and generally impacts the economy’s growth and development. Structural change is very critical for an economy’s long term growth. Since an economy is quite flexible and dynamic due to various influential factors (for example: globalization, changing world economic conditions, natural events), structural change is quite possible. All the sustained episodes of growth of an economy are underpinned by fundamental structural changes over time. Structural change leads to the emergence and expansion of new industries, which in turn causes the movement of labor from the traditional existing industries to new and modern ones. This improves the income of the economy as well as the productivity levels also see a considerable increment. But an economy can face many barriers while undergoing a structural change, for example: reluctance to changes and obsession with a particular existing ideology. These facets pose a great hindrance for an economy to change their basic structure. Thus an emerging nation should have a clear idea about identifying and overcoming these hurdles of structural transformation in order to achieve a long term and sustainable growth.

Example: The Asian countries have undergone structural changes, the earliest being Japan, followed by Taiwan and China. India too previously was an agriculture based economy, but its structural change has led it to a service based economy currently.

Hence, this concludes the definition of Structural Change along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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