Deindustrialization in the EU between Transformation and Decline

Abstract

ABSTRACT In the Kaldorian tradition, manufacturing is the main engine of growth. Deindustrialization is a concern for economists and policymakers. This study analyses deindustrialization occurring in the 28 EU countries, in the years 1991–2017. We use a methodology, that decomposes manufacturing employment, to examine if deindustrialization is caused by the growth of productivity, or by the shrinking of the manufacturing sector. Moreover, we analyze the disparities between European countries and principal EU areas. Results indicate that productivity growth is the major explanation for deindustrialization and that the German-centered core countries are reindustrializing while Southern periphery countries are in decline.