Does Deindustrialisation Matter?

Part of the Economics Today book series (ET)


Whilst Chapter 2 described the main structural changes in the UK economy over the past 30 years this is certainly not the first time that the UK has been subject to changes of this type. The industrial revolution saw the decline in the agricultural sector and the subsequent growth in the secondary sector. The more recent process of deindustrialisation strikes a harsh note with many people, however, in that there is a decline in what many people see central to British society: manufacturing. Moreover, even though this decline has been gradual over the past century it has appeared to pick up speed during the 1970s and 1980s. Many other countries have seen similar trends to those experienced in the UK but our decline in the manufacturing sector seems more acute. As it declines it imposes a number of costs of adjustment on any society, such as regional and structural unemployment. Moreover, there is a view that without a sizeable manufacturing sector the balance of payments will always constrain the economy since it is unable to provide sufficient manufactured goods for its citizens. The size of the manufacturing sector may also have implications for an economy’s growth, exchange rate, rate of interest, and inflation. Thus, is it possible for an economy to sustain itself by moving towards a post-industrial society or do we need to find some mechanism by which we can revive the manufacturing sector?


Service Sector Service Industry Manufacturing Sector Business Service Total Employment 
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© Mark Cook and Nigel M. Healey 1995

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