MANUFACTURING SECTORS

Britain important manufacturing sectors

Britain important manufacturing sectors

This paper defines de-industrialisation as a secular decline in the share of manufacturing in national employment. De-industrialisation, in this sense, has been a widespread feature of economic growth in advanced economies in recent decades. The paper considers briefly what explains this development and quantifies some of the factors responsible. It then examines the experience of Britain and America, which are two countries that have combined rapid de-industrialisation with a strong overall economic performance. The paper considers both the domestic situation of manufacturing industry in these countries and its foreign trade performance(Alford, 2007). It concludes by examining in detail the British balance of payments, and documenting how improvements in the non-manufacturing sphere have helped offset a worsening performance in manufacturing trade.

Introduction

As the recent decline of Rover, one of the last supposed giants of the British manufacturing industry, dominates the headlines, it is perhaps the time to reflect on the issue of the significance of manufacturing to a modern developed economy. It is commonly accepted that the United Kingdom was the pioneer of the industrial revolution; however, it can now possibly be argued that it is in fact now the first nation to undergo the reverse process of de-industrialisation (Alford, 1997).

Indeed, is the UK now undergoing a services revolution whereby, as agricultural production was replaced with manufacturing at the turn of the eighteenth century, the manufacturing sector is replaced by a dominant service sector? To what extent is de-industrialisation affecting the UK economy? Is it the cause of Britain's comparatively weak economic performance? As will be defended, the argument proposed within this paper is that de-industrialisation of the manufacturing sector does matter. In order to justify this claim evidence from both Britain and Japan will be considered examining the recent experiences of both these nations, looking at the developments within and the importance of the manufacturing industry, in both.

In order to examine the effects of de-industrialisation it is first necessary to define this oft used term, and to also determine the measures upon which any such effects of such a development can be measured. De-industrialisation as a concept can generally be defined as “a decline in the ratio of the workforce employed in industry” (Patnaik, 2003).

Drawing upon previous analysis by Alford (1997) it was decided that the key measures of de-industrialisation that should be considered would be the number of people employed within the manufacturing industry, manufacturing output/productivity, and the level of import and exports of manufactured goods. These were examined in the context of the UK with Japan used as a comparison in an attempt to determine whether the impact of manufacturing had a significant effect on the economic performance of contemporary nations.

The decline in the numbers employed in the manufacturing sector within Britain is one of the most striking indicators of the fortunes of the manufacturing industry in this country (see Alford 1997; Artis 1996, amongst others). In 1960 there were 8 851 000 employed in this industrial ...