Question

Write a short note on the changing structure of market?

Answer 1

An economy has certain major attributes viz. whether it is laid out on a socialistic pattern or capitalist principles, is it import driven or domestic consumption oriented, agriculture or manufacturing lead. These are features that hold true on a wholesale basis and permeates the entire economy. Structural change in the economy implies a change in the very basic nature of the economy. It may be illustrated with a few examples:

The Chinese economy and it’s rapid growth in the last few decades has been largely based on export of manufactures to the rest of the world. After the liquidity crisis of 2008 this model became unsustainable. The Chinese government attempted a structural change in their economy, from export driven to domestic consumption driven, through large scale investments.

Until 1991 the Indian economy had been ran on socialistic principles when it encountered a severe balance of payment crisis. Under the aegis of the then Finance Minister, the whole economy was given a new direction under the principles of Privatization, Globalization and Liberalization.

The Economy of Dubai had been largely driven by the petro-dollars of the UAE. But over the decades it has transformed into one largely based on financial and other business services.

As can be seen from the above, Structural Change in an economy means a change to the content of the whole economy and/or change in large scale relationships between major components of the economy. Currently the Indian economy has two major vulnerabilities : regressive taxation structure and weak manufacturing base. Any attempt to redress this will constitute a Structural Change to the economy.