## Deindustrialization: Causes and Implications

_IMF Working Papers, April 1, 1997_

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## Bibliographic details
- Authors: Ramana Ramaswamy, Bob Rowthorn
- Published: April 1, 1997
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451975826.001

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### Main argument
- All advanced economies have experienced a secular decline in the share of manufacturing employment (deindustrialization).
- Deindustrialization is argued not to be a negative phenomenon but the natural consequence of the industrial dynamism in an already developed economy.
- North-South trade has had very little to do with deindustrialization.
- The paper discusses the implications of deindustrialization for the growth prospects and the nature of labor market arrangements in the advanced economies.

### Key findings and analysis
- Deindustrialization is a widespread, secular trend across advanced economies marked by declining manufacturing employment shares.
- The phenomenon reflects structural change driven by industrial dynamism within developed economies rather than external trade pressures.
- North-South trade is assessed as having very little causal role in deindustrialization.
- The analysis links sectoral shifts (manufacturing to services) to productivity dynamics and employment-share changes in advanced economies.

### Implications for growth prospects
- Deindustrialization has consequences for the growth prospects of advanced economies that are explored in the paper.
- The transition from manufacturing to services affects aggregate productivity dynamics and thus long-run growth potential.
- The paper examines how the process of deindustrialization interacts with productivity effects and the services sector’s evolving role.

### Implications for labor market arrangements
- Deindustrialization influences the nature of labor market arrangements in advanced economies.
- Changes in employment composition (manufacturing to services employment and services sector share) have implications for employment policy and labor market institutions.
- The paper discusses how labor market policies and arrangements may need to adapt in response to structural employment shifts.

### Subjects and keywords emphasized
- Subjects: Economic sectors, Employment, International trade, Labor, Manufacturing, Production, Productivity, Services sector, Trade balance.
- Keywords include: current price, deindustrialization, deindustrialization phase, East Asia, economy, Employment, employment share, Europe, Manufacturing, North-South trade, process of deindustrialization, Productivity, productivity effect, service sector, services employment, Services sector, share, Trade balance, WP.

*IMF Working Paper No. 1997/042 (38 pages), DOI https://doi.org/10.5089/9781451975826.001*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/deindustrialization-causes-and-implications-2161_