Industrial Structure
Industrial structure refers to the composition of an economy in terms of its constituent industries and sectors, and the relative importance of each in terms of output, employment, and value added. The industrial structure of an economy evolves as it develops, typically shifting from agriculture to industry and then to services.[1]
Definition
Industrial structure describes how an economy's productive activity is distributed across sectors. It is typically analysed in terms of the three primary, secondary, and tertiary sectors, and is measured by each sector's share of GDP, employment, and output.[1]
The three sectors
| Sector | Composition |
|---|---|
| Primary Industry | Agriculture, forestry, fishing, and mining. |
| Secondary Industry | Manufacturing, construction, and utilities. |
| Tertiary Industry | Services, including retail, finance, and public services. |
Structural transformation
As economies develop, their industrial structure typically undergoes a transformation: the share of agriculture declines, the share of industry rises and then stabilises or falls, and the share of services grows. This pattern, sometimes called structural transformation or the Clark–Fisher hypothesis, reflects rising productivity and changing patterns of demand as incomes rise.[1]
Determinants
Industrial structure is shaped by factors including technological change, resource endowments, government policy, consumer demand patterns, and participation in global trade. Structural policies may aim to accelerate industrial upgrading or to smooth the adjustment costs of structural change.[1]