Fundamental Economic Structure and Structural Change in Regional Economies: a Methodological Approach

Regional economic structure is defined as the composition and patterns of various components of the regional economy such as: production, employment, consumption, trade, and gross regional product. Structural change is conceptualized as the change in relative importance of the aggregate indicators of the economy. The process of regional development and structural change are intertwined, implying as economic development takes place the strength and direction of intersectoral relationships change leading to shifts in the importance, direction and interaction of economic sectors such as: primary, secondary, tertiary, quaternary and quinary sectors. The fundamental economic structure (FES) concept implies that selected characteristics of an economy will vary predictably with region size. The identification of FES leads to an improved understanding of the space-time evolution of regional economic activities at different geographical scales. The FES based economic activities are predictable, stable and important. This paper reviews selected themes in manifesting an improved understanding of the relationship among intersectoral transactions and economic size leading to the identification of FES. The following four questions are addressed in this paper: (1) What are the relationships among sector composition and structural change in the process of economic development? (2) What are the approaches utilized to study structural change analysis? (3) Can a methodology be developed to identify FES for regional economies? (4) Would the identification of FES manifest an improved conception of the taxonomy of economies?