In economics,structural change is a shift or change in the basic ways a market or economy functions or operates.^[1]

Such change can be caused by such factors aseconomic development, global shifts in capital and labor, changes in resource availability due to war or natural disaster or discovery ordepletion of natural resources, or a change in political system. For example, asubsistence economy may be transformed into amanufacturing economy, or a regulatedmixed economy may be liberalized.^[2] A current driver of structural change in the world economy isglobalization.^[3] Structural change is possible because of the dynamic nature of theeconomic system.^[4]

Patterns and changes in sectoral employment drive demand shifts through theincome elasticity. Shifting demand for both locally sourced goods and for imported products is a fundamental part of development.^[5][6] The structural changes that move countries through the development process are often viewed in terms of shifts from primary, to secondary and finally, to tertiary production. Technical progress is seen as crucial in the process of structural change as it involves theobsolescence of skills, vocations, and permanent changes in spending and production resulting instructural unemployment.^[4][7]

Historically, structural change has not always been strictly for the better. Thedivision of Korea and the separate paths of development taken by eachstate exemplifies this.Korea under Japanese rule was relatively uniform in economic structure, but afterWorld War II, the two countries underwent drastically different structural changes due to drastically different political structures.^[8]

South Korea's economy before the 1950s mostly consisted ofagriculture. During the 1960s and 1970s, Korea began to change their structure toIT,micro systems technology, and alsoservices. More than 50% of the world uses aSamsung smartphone, whose headquarters are located there. Today, South Korea's economy is the 15th strongest economy system.

In theRuhr Area (Ruhrgebiet) inGermany, the economy was mostly marked bycoal and steel industry. During and after the coal crisis began in the 1960s and 1970s, this area started to change its economic structures to services, IT andlogistics. The cityDortmund opened the first technology center named "Technologiepark Dortmund" in the 1980s. Companies includingSignal Iduna andWilo are based there.

Structural change can be initiated by policy decisions or permanent changes in resources, population or the society. Thedownfall of communism, for example, is a political change that has had far-reaching economic implications.

Economic structural changes impact also on employment. A developing economy typically reveals a high share of employment in theprimary sector, while the share of employment in thetertiary sector is high in an advanced/developed economy.

Structural change tests are a type ofeconometrichypothesis test. They are used to verify the equality of coefficients across separatesubsamples of adata set.

• Chow test
• Structural fix