deindustrialization

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Deindustrialization

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.

deindustrialization

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.

deindustrialization

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.

See STRUCTURE OF INDUSTRY, STRUCTURAL UNEMPLOYMENT.

References in periodicals archive ?
The next elements common to both the Transcendentalists and Agrarians I will examine are their back-to-nature sensibilities and anti-industrialism.
Closely linked to these ideas were the two movements' angry anti-industrialism, both believing the lives of simple farmers and other rugged individualists of their times were being devalued by the dehumanizing profit motives and mechanical (that is, unnatural) industrialism of business interests in the United States (this propensity is linked to the labor and economic reform aims, as well as certain social reforms, advocated by the two movements).
Human life in nature, while mostly incorporated into Transcendental religious views, was also, as noted, linked to the movement's reform aims and anti-industrialism.
Yet it is equally obvious that the Southern Agrarians were part of a widespread movement of anti-industrialism which had followers not only in other areas of the United States but which swept through most European countries in the early decades of this century.
Clare equates criticisms of globalisation with anti-industrialism.