In this paper, we introduce an index of structural changes of the economy, and investigate the
relationship between economic growth and structural changes in the Japanese economy We
find that (i) there is no clear relationship between structural changes and business cycles in
the short run; however, (ii) the long run movements of structural changes are positively
correlated with economic growth. In the short run, our result is consistent with the
neoclassical view; it is also consistent with the Schumpeterian view of economic growth in
the long run.