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On the predictability of economic structural change by the Poincaré-Bendixson theory

Stijepic, Denis (2017): On the predictability of economic structural change by the Poincaré-Bendixson theory.

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Abstract

The three-sector framework (relating to agriculture, manufacturing, and services) is one of the major concepts for studying the long-run change of the economic structure. We discuss the system-theoretical classification of the structural change phenomenon and, in particular, the predictability of the structural change in the three-sector framework by the Poincaré-Bendixson theory. To do so, we compare the assumptions of the Poincaré-Bendixson theory to (a) the typical axioms of structural change modelling, (b) the empirical evidence on the geometrical properties of structural change trajectories, and (c) some methodological arguments referring to the laws of structural change. The results of this comparison support the assumption that the structural change phenomenon is representable by a dynamic system that is predictable by the Poincaré-Bendixson theory. Moreover, we discuss briefly the implications of this result for structural change modelling and prediction as well as topics for further research.

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