dindustrialisation

The term 'dindustrialisation'—often equated with deindustrialisation—describes the decline of manufacturing's role in an economy, evidenced by shrinking shares of manufacturing value added and employment relative to total GDP and a shift toward services. It is not synonymous with overall economic collapse; growth can continue as the economy reweights toward knowledge-intensive or service activities.

Causes include productivity gains and automation reducing manufacturing jobs, globalization and offshoring shifting production to lower-cost regions, demand shifts toward services, and policy choices that attract or discourage investment in industry. Economic resilience may depend on a successful transition, investment in skills, and regional diversification.

Consequences and policy responses: Regions dependent on manufacturing may experience unemployment and urban decay, while others benefit from increased efficiency and cheaper consumer goods. Policy tools include retraining programs, regional development initiatives, investment in infrastructure, and targeted innovation or industrial policies to support new manufacturing niches or advanced services.

Measurement and debates: Key indicators are manufacturing value added and employment shares, manufacturing output, and the distribution of economic activity by sector. Some economists discuss 'premature deindustrialisation' when manufacturing shares fall at relatively low income levels, arguing for timely policies to sustain industrial capacity or accelerate transitions to higher-value activities.

Examples and patterns: In many advanced economies, the manufacturing share declined since the 1970s, notably in the Ruhr area, the British Midlands, and the US Rust Belt. Some developing economies experienced rapid manufacturing growth before shares later plateaued or declined as services expanded.