Structural Change Theory

Structural Change Theory explains how economies evolve over time by shifting the dominant industries and sectors. It describes the transition from agriculture-based economies to manufacturing and then to service-oriented ones. These shifts reflect broader changes in technology, consumer demand, and productivity, influencing employment, income, and development. The theory highlights that these transformations are driven by structural factors in society and the economy, leading to differences in growth patterns and opportunities across regions and countries. Essentially, it shows how the fundamental organization of economic activities changes, shaping the overall economic landscape.