Causes Of Deindustrialization

After the World War II in most industrial and middle, high-income developing countries become decline in manufacturing employment. Changes in manufacturing employment increased the productivity of agricultural sector.

This increase of productivity decreased the labor requirements of agricultural and increases the demand for agricultural intermediate and capital inputs, and demand for consumer goods by those benefiting from the increase in productivity in agriculture. This phase is called the industrialization. The next phase is an abbreviation of employment in agriculture and an employment in services, come the tendency for to stabilize the share of manufacturing employment in total employment. In the new phase, the employment in manufacturing

During the last 30 years employment of manufacturing is become to fall dramatically, this process as we know is called deindustrialization. This phase is became from United States and Europa, is also covered Japan and also in 5 Tiger of Asia. Deindustrialization is the one of the reason for income inequality in United States and unemployment in European countries.

One of the reason for deindustrialization is globalization of markets and fast growth of North-South trade between the leading economies and developing world. At result, the fast growth of labor-intensive manufacturing industries in the developing world is displace the jobs of workers in the leading economies.

Deindustrialization take part in different time in different countries. First, it happened in United States the manufacturing employment in 1965s fall from 28% to 16% in 1994. In Japan, the manufacturing employment was 27% in 1970 and it fall down to 23% in 1994. In European countries it was 30% in 1970 and felt down to 20% in 1994s.

The fall of manufacturing is explained that the growth in employment is equal to the growth in output less that of productivity. In service sector also the rate of growth of output and productivity began to fall

The UK, the World’s first industrialized nation was seen this depression effect than relatively developed countries. To explain the structural changes in the UK’s economy many assumptions have been suggested by the economics and politics. 1980s Britain’s industrial fall is decisive in proving steps in political and economic, including the growth of Monetarism and drop of Keynesian concepts of economic management. Economizer and economic historians claim some factors to whole industrialized countries as can explain how the UK was faced with unique problems which facilitated rapid deindustrialization.

Foremost, output per worker has been displaced to increasing rapidly in the manufacturing sector than in other sectors (such as services). If the rational speculation will be done the demand for manufactured goods and services will be same and then employment will move to the service sector as fewer workers will be necessary to produce the manufactured goods the economy needs in the future.

Secondly, if real income increases, individuals prefer to extend more of any extra income on services rather than on manufactured goods. This would extend to reinforce the impact of various capacity rates across