1. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-1 Chapter 17 Structural change Primary sector Manufacturing Services

2. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-2 Main concepts Structural reforms Non-structural reforms Reasons for structural changes Structural change in Australia Manufacturing structural change Lecture Plan

3. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-3 Australia’s GDP by Sector, 1965, 2001, % Source: Compiled from World Bank, World Development Report, 1992 and 2003.

4. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-4 Main Concepts Structural change: a shift in the pattern of production in the economy, resulting in improvements in the production level and productivity Structural policy: measures taken at the microeconomic level to improve the economic performance

5. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-5 Structural Reforms Those changes to the environment of decision making that induce decisions leading to greater efficiency Changes to the regulatory environment – The amount of allowed market competition – Level of tariffs and quotas etc. Changes to incentives

6. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-6 Non-structural Reforms Those that do not alter the decision-making environment or incentives – Efficiency drives in the railways or water authorities – Plans to reduce manning levels on the waterfront – Industry plans for motor vehicles and textiles (these would include some structural elements too)

7. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-7 Reasons for Structural Changes Technological change Overall economic performance – GDP per head – Aggregate productivity – External sector performance Information and analysis International factors (e.g. successful reforms in other countries)

8. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-8 Changes in labour productivity in the business sector, 1975 to 2002, % p.a. Country1975-19851986-19911991-19961997-2002 Australia 1.90.42.22.1 United States 1.21.01.42.3 Canada 2.82.11.61.7 European Union 2.41.92.01.2 New Zealand 0.71.10.21.5 Switzerland 0.9–1.0–0.10.9 South Korea 5.56.15.34.0 OECD 2.11.7 1.8 Source: Adapted from OECD Economic Outlook, June 2003, no. 73.

9. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-9 Structural Change in Australia Protection Microeconomic reform – Competition policy – Communication services – Government business enterprises (e.g. privatisation or corporatisation) – Taxation reform – Labour market reforms

10. Copyright  2005 McGraw-Hill Australia Pty Ltd PPT Slides t/a Economics for Business 3e by Fraser, Gionea and Fraser 17-10 Australian Manufacturing: Indexes of Output and Employment, $/employee Source: Compiled from data in Australia Productivity Commission, Trends in Australian Manufacturing, August 2003.