Industrial Structure

Abstract

A study of the Industries Assistance Commission (IAC) (1977), which used the standard deviation of sectoral growth rates within countries as a measure of structural change, found that the extent of structural change in the period 1950–75 varied widely between countries, with Australia exhibiting a relatively low level of change. We have performed similar calculations using data for nine ‘industrial’ sectors in a number of countries over the period 1970–80.¹ For each country, the standard deviation of the ratio of sectoral output at constant prices at the end of the period to that at the beginning was computed across these nine sectors. Because the degree of variability in both changes in output and changes in sectoral implicit deflators should be of interest—and all the more so given the period chosen—the calculation has been repeated comparing the level of the implicit deflator for each sector’s output at the end of the period against that at the beginning. The standard deviation of these ratios has then been computed across sectors within each country.² These standard deviations are reported in Table 4.1. It would appear that, judging by the IAC’s criterion (variability in sectoral growth rates), Australia is performing comparatively poorly, even though there is a relatively high degree of variability in Australian price movements. Presumably the key to these matters lies in pressures to innovate and reallocate even in the absence of relative price movements, and also in the reasons for the different degrees of responsiveness of relative output levels to relative price movements (i.e. for different elasticities of supply between sectors).