Factors Driving Structural Change in Regional Economies: Theory, Evidence, and Policy Implications

Regional economies are not static configurations — they undergo continuous structural change driven by an interplay of geographic, institutional, technological and policy-related forces. This article examines the principal factors that shape structural transformation in regional economies, drawing on classical location theory, new economic geography, endogenous growth models and comparative evidence from Central Asian and OECD countries. The analysis identifies seven major factor categories: agglomeration dynamics and geography, institutional quality and policy frameworks, human capital and labor market conditions, infrastructure development, industrial specialization patterns, investment climate and technological capacity. The article argues that structural change in regional economies cannot be adequately explained by single-factor models; instead, a multi-layered analytical approach is required. Policy implications are discussed with particular reference to transition economies where regional disparities remain pronounced and where structural transformation is a stated development priority.