Deindustrialization in the EU between Transformation and Decline

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.

KEYWORDS:

• Deindustrialization
• European Union
• core and periphery

JEL Classification:

• E24
• J20
• L60
• O14
• 052

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

1. For the complete derivations of the second and the third decompositions, see Tregenna (2009).

2. In every decomposition there is a “labor productivity effect.” This effect measures the variation associated with the change in labor intensity of a sector, even if it does not measure each time exactly the same thing due to the differences in the calculations.

Additional information

Notes on contributors

Claudio Di Berardino

Claudio Di Berardino is an Associate Professor at the Department of Neuroscience and Imaging of the University G. d’Annunzio of Chieti-Pescara and a member of the Italian Economic Association. He holds a Ph.D. in Economics and History of Land (University of Pescara). He has extensive research in regional growth and disparities, wellbeing and quality of life, migration and development, structural change, and industrial districts.

Ilaria Doganieri

Ilaria Doganieri is a Ph.D. student in Business and Behavioural Sciences at the Department of Neuroscience and Imaging of the University G. d’Annunzio of Chieti-Pescara.

Gianni Onesti

Gianni Onesti is a Research Fellow at the Department of Neuroscience and Imaging of the University G. d’Annunzio of Chieti-Pescara. He holds a Ph.D. in Economics and Business. His research interests include the structural change of the production system (with a focus on the input-output methodology) and regional economic growth with a focus on industrial districts and knowledge spillovers.