XClose

UCL Institute for Innovation and Public Purpose

Home
Menu

Deindustrialisation reconsidered: Structural shifts and sectoral heterogeneity

IIPP Working Paper 2020-06: Deindustrialisation reconsidered

15 July 2020

Download working paper

UCL Institute for Innovation and Public Purpose (IIPP) Working Paper Series: IIPP WP 2020-06


Authors

  • Fiona Tregenna | South African Research Chair in Industrial Development, University of Johannesburg
  • Antonio Andreoni | Associate Professor of Industrial Economics at University College London, Head of Research at the UCL Institute for Innovation and Public Purpose

Reference

Tregenna, F. and Andreoni, A. (2020). Deindustrialisation reconsidered: Structural shifts and sectoral heterogeneity. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2020-06). Available at: https://www.ucl.ac.uk/bartlett/public-purpose/wp2020-06

Abstract

As a stylised fact of deindustrialisation, the relationship between Gross Domestic Product (GDP) and the share of manufacturing in GDP and employment generally follows an inverted-U pattern, across countries and over time. We analyse the changing dynamics of deindustrialisation, in particular premature deindustrialisation, and the heterogeneity of deindustrialisation experiences. Our results bring to light the high degree of heterogeneity within manufacturing, both between low-, medium- and high-tech manufacturing, and also within each of these categories. Significantly, not all sub-sectors of manufacturing display an inverted-U pattern. The greater the technological intensity of a manufacturing activity, the less concave is its pattern of development, becoming a monotonically increasing line and even a convex curve for the most high-tech sub-sectors. In terms of changes over time, while the curve shifts downwards and to the left for manufacturing as a whole, these dynamics also vary a lot by sub-sector. We provide an analytical framework for characterising the diversity of country experiences over time, and propose a working definition for premature deindustrialisation that allows us to identify possible premature deindustrialisers. The findings emphasise the importance of targeted policy responses that take into account the specific nature of deindustrialisation in particular country contexts, rather than ‘one-size-fits-all’ policies. For instance, it is clear that even high-income economies can grow the shares of at least some sub-sectors of manufacturing in GDP and/or employment.