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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 ?
It needs to be emphasized that it is the actual level of industrial employment, rather than the rates of unionization of a presumably smaller pool of manufacturing workers in deindustrializing economies, that may be of greater significance for policymakers.
Springhill began to exhibit all of the classic symptoms of a deindustrializing small town: depopulation (declining from 7,348 in 1951 to 5,200 by 1971, and 4,000 in 2001) as workers and families moved elsewhere in search of employment, frantic searching for alternative industry (including a number of new start-ups fuelled by generous provincial government assistance), and increasing unemployment.
In this way, Hebert's miner shares much with representations of labour in other deindustrializing regions.
This contrasts sharply with the public art produced in deindustrializing centres such as Youngstown, Ohio, and even nearby Sackville, New Brunswick, where a 1979 film and photographic exhibition about a declining foundry was both celebratory of workers' bodies and critical of foreign competition and capital flight.
In practice, shock therapy has produced significant inflation, has promoted stagnation, and has had the effect of deindustrializing large segments of the economy.
Much like other areas in Toronto, the area continued to be a draw for poor immigrants looking for work in an increasingly unstable deindustrializing global labour force (Teelucksingh 2002).
Then they ran into voters from the deindustrializing Midwest.
The pleasures they offer are the product of complex articulations of right wing and left wing takes on the current globalized social and economic formation, and the way they celebrate the basically white working-class skills and character that has taken such a hit in the deindustrializing capitalist nations.
The belief that the country was deindustrializing was aggravated by the view that the U.
In those firms, they find a competitiveness that belies the notion that the United States is losing its edge and deindustrializing.
EGGERT DESCRIBES the transformation of Harrisburg from a preindustrial river town, to a modestly industrialized city, to a deindustrializing (by about 1900) state capitol.
Thus, while it is possible to say from the data we have examined that the United States is not deindustrializing, this is not to conclude that declines in both production and employment have not hit certain industries particularly hard.