Abstract
This article is envisioned as a first step in a comprehensive analysis of the European Union’s (EU) industrial base, designed to inform the current debate, and future policy decisions regarding deindustrialisation and reindustrialisation in the EU. We focus on the study of deindustrialisation and productivity, to determine the causes of deindustrialisation and its relation to productivity in the EU, and whether it can be explained primarily as a natural process, or alternatively as a negative economic trend. Our results indicate that the main causes of deindustrialisation in the EU were shifting demand patterns caused by rising GDP per capita, followed by growing international trade which corroborates the hypothesis that the process is natural. In the second part we take a closer look at manufacturing productivity as an integral cause of deindustrialisation. We analyse the impact of market dynamics, concentration and firm size on manufacturing productivity, where we find evidence which supports the conclusion that a higher level of market dynamics increases productivity, while firm size and market concentration seem to decrease industry productivity.
Highlights
Deindustrialisation is a well-researched phenomenon that began in the second half of the twentieth century in developed countries
The results indicate that Clark’s effect seems to be stronger than Baumol’s, that is, GDP growth seems to have a stronger effect on deindustrialisation than rising productivity, which is in agreement with the findings of Kollmeyer (2009)
Since virtually all of the tested models show the same sign in all the variables, we can conclude that industry dynamics, investments per person, and personnel costs all have a positive effect on labour productivity, while the number of firms and employees in an industry have a VARIABLES nbr lninvpp lnpemp lnnoe lnpc Constant
Summary
Deindustrialisation is a well-researched phenomenon that began in the second half of the twentieth century in developed countries. Since it has spread to developing countries as well (primarily in Eastern Europe and South America), making it a global, almost all encompassing phenomenon. Before the crisis of 2008, the prevailing opinion was that it was a by-product of successful economic development. After the crisis the prevailing opinion shifted. Countries gradually started shifting their focus more and more toward industrial performance, and previously dormant ideas that stressed the link between manufacturing and overall economic growth again began to see the light of day. The term ‘reindustrialisation’ could be heard in increasing frequency. In light of these events, the European Union (EU) states decided to begin working on a common industrial policy
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
