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A situation in which an economy begins producing more services than goods. An analyst may say that deindustrialization is occurring when decreases in manufacturing are accompanied by increases in consulting companies. This can be beneficial to some sectors; indeed, some investors look for evidence of deindustrialization to know what industries are likely to be profitable. However, deindustrialization can be detrimental to some workers and regions. For example, as the United States has deindustrialized, the city of Detroit, which is home to many automakers, has lost approximately half of its population, and consistently maintains a high unemployment rate relative to the rest of the country.


A shift in an economy from producing goods to producing services. Such a shift is most likely to occur in mature economies such as that of the United States. This shift has considerable impact on investors' view of the attractiveness of various industries.
Deindustrializationclick for a larger image
Fig. 38 Deindustrialization. The distribution of gross national product shows how the industrial sector in advanced economies grows more slowly than the service sector. The figures for industry include those for manufacturing. Source: World Development Report, World Bank, 2004.


a sustained fall in the proportion of national output accounted for by the industrial and manufacturing sectors of the economy, a process that is often accompanied by a decline in the number of people employed in industry (compare INDUSTRIALIZATION).

There is a well-established trend in advanced economies for the industrial sector to grow more slowly than the service sector, as shown in Fig. 38. For the UK, the share of industry in GDP fell from 43% in 1960 to 29% in 2002, while the share of services increased from 54% to 70%. Over the same period, employment in industry in the UK fell from 11.8 million in 1960 to 3.7 million in 2003.

Changes in sector shares may simply reflect changes in the pattern of final demand for goods and services over time, and as such may be considered a ‘natural’ development associated with a maturing economy. On the other hand, deindustrialization that stems from supply-side deficiencies (high costs, an overvalued exchange rate, lack of investment and innovation) which put a country at a competitive disadvantage in international trade (see IMPORT PENETRATION) is a more serious matter. In this case, deindustrialization often brings with it a fall in national output, rising unemployment and balance of payments difficulties.

The extent of deindustrialization in the UK was even more marked in the early 1980s because of Britain's artificially high exchange rate, bolstered by UK oil exports, which caused Britain to lose overseas markets.


References in periodicals archive ?
Deindustrialization still threatens as China and India and many other countries continue to seek what the province now possesses, and to leapfrog places like Ontario.
Bagchi's analysis in relationship between free trade and deindustrialization is Europeanization and re-colonization of mind.
In exploring these and other questions, the contributors to this special issue of Urban History Review / Revue d'histoire urbaine have sought to ascertain how deindustrialization shaped Canada's urban and social history.
The affirmative action hires failed to make much of an impression on the industry because they entered it just as deindustrialization, downsizing, and automation were eliminating jobs and putting many traditional breadwinners out of work.
Until now the process of de-conglomeration and deindustrialization is still continuing.
to really feel the effects of deindustrialization," she said.
Outside of the oil sector, massive deindustrialization is a likely result.
Deindustrialization -- due largely to unregulated global trade and a long-term overvalued currency -- has eliminated millions of union jobs in the manufacturing sector, dramatically shrinking labor's core strength.
They did not accept the responsibility of safeguarding the environment, and they did not accept any civic responsibility for the vast economic experiment that was American deindustrialization.
Selling the Community: Local Responses to Deindustrialization and Downsizing.
Cusack of the Wissenschaftzentrum in Berlin for their work, "The Causes of Welfare State Expansion: Deindustrialization or Globalization?
Because of the book's structure, it cannot be reviewed as a traditional monograph, but rather must be evaluated on the extent to which the narratives fulfill the author's goals, support the main arguments, and make a contribution to the scholarly conversation on deindustrialization and the use of oral sources.