Economists frequently speak of structural reforms and structural effects.

For example, Manmohan Singh (1992):

The economic crisis was used as an opportunity to implement basic structural reforms in the areas of industrial policy, trade policy, tax policy, public sector management and the financial system.

Donald Walker (1984):

money plays a central role as a means of payment, and its presence in the economy has structural effects.

What purpose does the adjective structural serve in the above sentences? What difference would it have made if the word were deleted or replaced by non-structural?

Are there mere reforms and effects that differ from structural reforms and structural effects? Are there non-structural reforms and non-structural effects?

Is the word structural just a fairly vague term with a connotation similar to fundamental or important?


1 Answer 1


A structural reform is a reform that literally tries to change the fabric or structure of an economy. A structural reform has to significantly change the regulatory or institutional framework in which economy operates.

For example if a country has inflexible labor market laws and they change them to flexible labor laws that actually changes the structure of economy, the optimal way of how people are hired and fired, the optimal way of how goods and services are produced, workers trained and so on. Often structural reform is used as synonym for supply side reform - which is not entirely correct but not without merit as a supply side reforms are inherently structural in nature as they focus on improving regulations in way that allow for higher production (although some demand side policies can be considered structural as well).

Opposite of structural reform is not non-structural reform but just an reform that will not make much difference to the fabric of the economy. For example, if you have inflexible labor market laws and you just reform your laws to keep them inflexible but maybe modernize them in some way or do some changes that fundamentally do not change how economy operates. Also an reform that would be only temporary, for example for some crisis situation, would not be structural.

A structural effect would again be some effect that has impact on the fabric of the economy. For example R&D can cause structural change in economy. Thanks to the internet now we have all the ride/house sharing services that fundamentally change how taxi or hotel markets operate.

  • $\begingroup$ So, structural is simply a synonym for fundamental or important? $\endgroup$
    – user23101
    Commented May 3, 2020 at 1:46

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