Deindustrialization
Decline in the share of manufacturing industries in a country's economy. Typically, industrial plants are closed down and not replaced, and service industries increase.
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De-industrialisation and the balance of payments in advanced economies
Robert Rowthorn and Ken Coutts*
Address for correspondence: Faculty of Economics, University of Cambridge, Sidgwick Avenue, Cambridge CB3 9DD; email: rer3{at}econ.cam.ac.uk
Abstract
This paper defines de-industrialisation as a secular decline in the share of manufacturing in national employment. De-industrialisation, in this sense, has been a widespread feature of economic growth in advanced economies in recent decades. The paper considers briefly what explains this development and quantifies some of the factors responsible. It then examines the experience of Britain and America, which are two countries that have combined rapid de-industrialisation with a strong overall economic performance. The paper considers both the domestic situation of manufacturing industry in these countries and its foreign trade performance. It concludes by examining in detail the British balance of payments, and documenting how improvements in the non-manufacturing sphere have helped offset a worsening performance in manufacturing trade.
Key Words: De-industrialisation • Balance of payments • OECD economies
JEL classifications: F1, O14, O57
Manuscript received February 16, 2004; final version received April 28, 2004.
Online ISSN 1464-3545 - Print ISSN 0309-166X
Copyright © 2006 Cambridge Political Economy Society
Oxford Journals Oxford University Press
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