Structural change in economy

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Structural change of an economy refers to a longterm widespread change of the fundamental

structure, rather than microscale or short-term output and employment. For example,
asubsistence economy is transformed into a manufacturing economy, or a regulated mixed
economy is liberalized. A current structural change in the world economy is globalization.

Fisher (1939) [1] and Clark (1940)[2] look at patterns in changes in sectoral employment. The logic
of their arguments being that patterns of production are functions of the level of income and that
resource and production shifts are an integral part of development. The major determinant of
these shifts is the income elasticity of demand. Goods or sectors for which there is a high income
elasticity of demand will grow in importance as income grows. Countries start with their
production dominated by primary production, then secondary activities start to dominate and
finally the tertiary sector dominates.

Structural change can be initiated by policy decisions or permanent changes in resources,

population or the society. The downfall of communism, for example, is a political change that has
had far-reaching implications on the economies dependent on the state-run Soviet economy.
Structural change involves obsolescence of skills, vocations, and permanent changes in spending
and production resulting in structural unemployment.

Short-term economical challenges can be managed with short-term fiscal or monetary

policy decisions, and fluctuations are expected to even out in a few years. Managing structural
change requires long-term investments such as education, and reforms aimed at increasing labor
mobility. The Trade Adjustment Assistance is an example of such a program.[3]

Economic planning

Economic planning in india

The long term objective of Economic Planning were spelled out in various planned documents
in the interim documents. Upto the 7th five year plan , broadly the main objcetives were:-
1).Economic gwoth, approximately 5%per annum.
2).Self Reliance
3).Removal of Unemployment.
4).Removal of Economic inequalities(govt. removes inequalities by various tech. like
Nationalisation, putting money in the market, holding some of the institutions under its own
control etc.)
5). Elimination of Poverty.
6).Modernisation.

In the subsequent plans, they were simply related to the economic growth in Indian
perspective. Various plans did not plays equal emphasize on these objctive, whereas earlier
plas led stress on rapid economic growth more then any other objective.

The 5th and 6th plan laid great importance to self reliance, generation of employment and
removal of poverty.

In the 7th plan, modernisation was stressed.

The government which assumed in 1991 virtually abandoned these long term objectives of
economic planning. Its entire concern was to implement a programme of Macro economics,
stablisation through Fiscal correction.Moreover, trade, industrial and public sector policies
aimed at undermining the very system of economic plannig.

The 9th plan focused on accelerated growth,recongnizing a special role for agriculture, for its
stronger poverty reducing and employment generating facts which will be carried out over a
period of 15 years.