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.
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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
In an attempt to offer an interdisciplinary range of critical perspectives on the fields outlined above, this special issue of Social Justice features both theoretical and ethnographic interventions on such topics as the politico-economic roots of the contemporary penal state, the commodification of deindustrialized areas as carceral spaces, the racialized exclusionary practices at play in urban gentrification processes, the hybridization of punitive criminal justice and welfare regimes in the lives of criminalized poor people, the increasing centrality of addiction recovery as a neoliberal control technology, and the growing overlap between racialized practices of mass criminalization and the punitive governance of global migrations.
While middle America deindustrialized, Mexico was traveling the same difficult road toward industrialization that developed countries had taken more than a century before.
Over three years, the former German areas were completely deindustrialized.
Capitalist restructuring under way since 1975 has altered labor markets, deindustrialized manufacturing bases, and marginalized urban areas where black, Latino, Asian, and working-class whites live, concentrating permanent joblessness and underemployment into the U.S.
Nevertheless, given the concentrated nature of outbound FDI (in financial and resource industries), and the increasingly deindustrialized and resource-dependent nature of the Canadian economy, the combined effect of these flows has been to reinforce Canada's renewed status as a resource supplier.
In 1990s, during the transition period, Bulgarian economy has been deindustrialized. Compared with other sectors as heavy and light industry, mining and agriculture, the services are the main motive power of economic growth in recent years, contributing to 65.6% of the gross value added.
I LIVE IN A DEPLETED CITY (Sydney), in a deindustrialized region (Cape Breton Regional Municipality), on a marginal island (Cape Breton), in a have-not province (Nova Scotia).
Where are the stories about the corporate tax breaks that have helped to compromise the health of our schools, especially in deindustrialized urban centers where the shrinking tax base has seriously compromised education?
The UK has been practically deindustrialized in recent years, having created a sharp tilt towards financial sector, which bears additional risks amid worsened current account dynamics.
In the 1980s and early 1990s, they researched "service-dependent ghettoes," sometimes referred to as "psychiatric ghettoes," in the zone of transition in the inner city, characterizing these areas as reservoirs of potential clients resulting not only from the deinstitutionalization juggernaut, deindustrialized, and stagnant economies with plentiful cheap housing, but also suburbanization.
It is interesting to note that the disappearance of resistance in the deindustrialized folk song tradition corresponds with an increasing number of references to working-class masculinities.
Consider New Hampshire, which was deindustrialized during the 1990's.