SOAS Research Online

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 invertedU 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