Deindustrialisation is typically conceptualised as a decline in manufacturing
as a share of total employment. From a Kaldorian perspective deindustrialisation
could have negative implications for long-run growth, given the special
growth-pulling properties of manufacturing. However, defining deindustrialisation
purely in terms of employment share is conceptually limiting given
that some of the Kaldorian processes operate primarily through output
rather than employment, as well as blunting empirical analysis by
not focussing enough on changes in manufacturing share of gross domestic
product (GDP). This study develops a new method using decomposition
techniques to analyse changes in manufacturing employment levels
and shares in 48 countries over periods of �deindustrialisation�.
The analysis separates out changes in the levels and shares of employment
manufacturing into components associated with changes in the share
of manufacturing in GDP, the growth of manufacturing value-added,
the labour intensity of manufacturing production and economic growth.
The results indicate that in most cases the decline in manufacturing
employment is associated primarily with falling labour intensity
of manufacturing rather than an overall decline in the size or share
of the manufacturing sector. We suggest that deindustrialisation
should appropriately be defined in terms of a sustained decline in
both the share of manufacturing in total employment and the share
of manufacturing in GDP.
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