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Structural Change and Australian Economy

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Structural Change and Australian Economy

Structural change is the change in the pattern of production in an

economy as certain products, processes of production and industries

disappear and are replaced by others. The past century has seen the

relative decline of agricultural and manufacturing industries, and the

rise of services and new technology sectors. Structural change can be

caused by a wide range of economic influences including changes in the

pattern of consumer demand and technological change. The speed of

structural change depends on the ability of an economy or industry to

adjust quickly. People's natural resistance to change and government

regulation often impedes the process of structural adjustment.

Past Macroeconomic policies have been largely ineffective in bringing

about structural change. For example Australia's past trade deficits

can be blamed on structural problems that failed to react to

government macroeconomic policies. To solve economic problems such as

high inflation and high unemployment governments are shifting away

from macroeconomic policies to microeconomic policies.

Microeconomic policy or Microeconomic reform is action taken by the

government to improve resource allocation between industries in order

to maximise output and promote structural change. It is considered

that microeconomic reform will be effective in dealing with long term

problems such as international competitiveness, high foreign debt and

high structural unemployment. The shift towards microeconomic reform

includes a change of focus from influencing demand towards influencing

supply. This is called supply side economics which has ...

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...ale sales tax and the introduction of a broad

based goods and services tax created a fairer taxation system which

does not rely on taxing particular products. Australia has been a

strong advocate for free trade with other countries. This will allow

Australia access to new international markets on fair terms at a time

where microeconomic reforms in the agricultural sector were resulting

in greater competitiveness for Australian products.

Through the use of microeconomic policy, promoting structural change,

the Australian government has been able to rid the economy of

technical inefficiencies which inhibit economic growth and prosperity

and which aren't in the public's interest. Through precise

microeconomic policy the government has been able to target specific

areas and improve efficiency in the larger scale as well.
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