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What do you understand by the term structural change? Examine the contribution that microeconomic policy has made to improving the structure and performance of the Australia economy.

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Introduction

What do you understand by the term structural change? Examine the contribution that microeconomic policy has made to improving the structure and performance of the Australia 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. ...read more.

Middle

This is called supply side economics which has a focus on reducing business cost. The overall aim of microeconomic reform is to improve efficiency of markets, productivity and competitiveness. Deregulation of industries has been an important part of the microeconomic reform policies for the Australian economy. For example in the agricultural sector, marketing boards which were often the only buyer and seller of farm output have been dismantled. In the wheat, egg and dairy industries deregulation has allowed a market economy, free of excessive central control, improve efficiencies and competitiveness by forcing inefficient operators out of the markets and the remaining operators to adopt technological change in order to survive. ...read more.

Conclusion

The abolition of wholesale 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. MICHAEL VOET ...read more.

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