Characterising deindustrialisation: An analysis of changes in manufacturing employment and output internationally

Deindustrialisation is typically conceptualised as a decline in manufacturing as a share of total employment. From a Kaldorian perspective deindustrialisation could have negative implications for long-run growth, given the special growth-pulling properties of manufacturing. However, defining deindus...

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Bibliographic Details
Published in:Cambridge journal of economics 2009-05, Vol.33 (3), p.433-466
Main Author: Tregenna, Fiona
Format: Article
Language:English
Subjects:
Changes
Deindustrialization
Economic growth
Economic sectors
Economic theory
Employment
GDP
Gross Domestic Product
High income
Industrial economics
Industrial structure
Labor
Labor productivity
Manufacturing
Manufacturing industries
Manufacturing output
Manycountries
Output rate
Productivity
Studies
Unemployment
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Summary:Deindustrialisation is typically conceptualised as a decline in manufacturing as a share of total employment. From a Kaldorian perspective deindustrialisation could have negative implications for long-run growth, given the special growth-pulling properties of manufacturing. However, defining deindustrialisation purely in terms of employment share is conceptually limiting given that some of the Kaldorian processes operate primarily through output rather than employment, as well as blunting empirical analysis by not focussing enough on changes in manufacturing share of gross domestic product (GDP). This study develops a new method using decomposition techniques to analyse changes in manufacturing employment levels and shares in 48 countries over periods of 'deindustrialisation'. The analysis separates out changes in the levels and shares of employment manufacturing into components associated with changes in the share of manufacturing in GDP, the growth of manufacturing value-added, the labour intensity of manufacturing production and economic growth. The results indicate that in most cases the decline in manufacturing employment is associated primarily with falling labour intensity of manufacturing rather than an overall decline in the size or share of the manufacturing sector. We suggest that deindustrialisation should appropriately be defined in terms of a sustained decline in both the share of manufacturing in total employment and the share of manufacturing in GDP.
ISSN:0309-166X
1464-3545
DOI:10.1093/cje/ben032