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What role has labor-saving technological change played in the recent past in charting out the trajectory of employment? Have we already transitioned into a new technological regime where production technologies are more invasive upon labor's terrain? In this study, I provide empirical evidence to answer these questions. Using industry-level data from 12 advanced economies for 1970–2007, I show that capital goods did not become more effective in labor-saving after 1980 or 1990. Similarly, the strength of the relationship between employment and output did not decline after 1980 or 1990. While many recent econometric studies have estimated the number of workers displaced due to industrial robots with which the media and public are highly preoccupied, there is nothing new in the fact that production technologies are labor-saving and displace workers. The importance of demand side factors and structural change (mainly deindustrialization) in determining employment patterns is often neglected, leading to a misleading assessment of the impact of labor-saving technologies on employment. • It is not new that automation is labor-saving or displaces labor. • Deindustrialization is a secular dynamic that depresses manufacturing employment. • No acceleration in within-labor-saving effect of capital goods since around 1980 or 1990. • No weakening in the strength of the relationship between employment and output since around 1980 or 1990. [ABSTRACT FROM AUTHOR]

• The article proposes an empirical analysis of Brazilian deindustrialization from a Marxian perspective. • Inter-regional input-output analysis is the quantitative instrument used to measure deindustrialization indicators. • Two critical situations indicating structural change are proposed. • The results indicate a process of deindustrialization in Brazil between 1995 and 2010. • The results show that the primary sector is gaining ground in the dynamization of Brazilian capitalism. The article brings new indicators that reinforce the thesis that the Brazilian economy went through a process of deindustrialization. Based on the guiding principle of Marx's reproduction schemes, the instrument of inter-regional input-output analysis was used as empirical method. The output multipliers obtained from the Leontief and Ghosh models were used as indicators for measuring structural changes. Critical situations that can show whether there were structural changes in the sectors of the economy, considering both the local economic activity and its relationship with the world economy, are presented. The main results confirm the existence of a deindustrialization of the Brazilian economy. However, it was found that, in absolute and relative terms, the reduction in the capacity of the Brazilian manufacturing to drive the economy oscillated between moments of greater and lesser intensity. Furthermore, strong indications that the Brazilian primary sector is becoming an enclave were found. [ABSTRACT FROM AUTHOR]

• Manufacturing share in India's GDP has increased by about 16 percentage points between 2003 and 2018. • Dominant contribution to increased manufacturing GDP share is made by petroleum refining. • There has been a tremendous increase in the real value-added share of ICT equipment industry. • For assessing properly the performance of manufacturing, double-deflation of GDP is essential. Contrary to a widely held impression that the share of manufacturing in India's GDP has long stagnated, the paper claims that it has increased significantly. Measured at the prices of different goods and services prevailing in 2004-05, and deflation applied separately with input prices as well as output prices to account for differential input price trends, the GDP share of manufacturing has increased during the post-reform period from about 17 per cent in 1993-94 to about 32 per cent in 2018-19. The paper notes that the concept of real share in GDP relates to the volume effect and represents the change in the share of the volume of manufacturing activity out of the volume of all economic activities in the Indian economy. Some explanation is provided for the apparent stagnancy of the share of manufacturing in India's GDP at current prices. [ABSTRACT FROM AUTHOR]

• Examine industrial trends in six Central American economies, and find that the industrial employment share has declined by an average of 2.5 percentage points over the past two decades. • Decline not due to a trade-driven deindustrialization but rather due to an increase in barriers that restrict the efficient flow of labor across sectors. • Policy interventions targeting these barriers could potentially lead to significant industrial expansion, but the economic impact may be marginal, with aggregate output projected to increase by 3.2 percent or less. • Boosting productivity could be a more prudent growth strategy. This paper analyses industrial trends in six Central American economies by assembling and harmonizing sectoral data from multiple sources. Industrial employment share has declined by an average of 2.5 percentage points over the past two decades. Contrary to a trade-driven deindustrialization hypothesis, which suggests that cheaper imports have replaced domestic production of industrial goods, the findings indicate that this decline is primarily driven by an increase in barriers that restrict the efficient flow of labor across sectors. The paper argues that policy interventions that target these barriers could potentially lead to significant industrial expansion. However, the economic impact of such policies may be marginal, with aggregate output projected to increase by 3.2 percent or less upon eliminating these barriers. Moreover, this approach also carries risks, as it may introduce new distortions that could further hinder economic efficiency. Perhaps a more prudent growth strategy will be to concentrate on boosting productivity, which though challenging, directly affects the output. [ABSTRACT FROM AUTHOR]

• Exports of knowledge-intensive business services (KIBS) depend on industrialization. • Premature deindustrialization harms capacity building at KIBS. • A KIBS export-led development strategy is not an alternative to industrialization. • Productive specialization in the service economy is path-dependent. • National Innovation Systems (NIS) need to be shaped by industrialization to foster KIBS. The transformation of the services sector and the deindustrialization of most economies have increased support for a KIBS export-led growth strategy for premature countries. However, the literature on deindustrialization argues that premature countries develop non-dynamic services mostly, which casts doubt on the viability of that strategy. This article theoretically and empirically analyzes this hypothesis. Using evolutionary and neo-Schumpeterian arguments, we point out the relevance of the path dependency of the productive structure throughout the complex transition from an industrial economy to a service economy. The empirical section analyzes the importance of the previous industrialization of a country to be a successful KIBS exporter. It finds that countries that achieved a high level of industrialization before deindustrializing are more likely to export KIBS than those countries that did not achieve advanced industrialization. Science-based and specialized suppliers manufacturing are of key importance for the development of KIBS capabilities. [ABSTRACT FROM AUTHOR]

• Deindustrialization may emerge in both developed and developing countries. One dimension of the industrialization trend is regional deindustrialization in a country. • Analyzes inter-state deindustrialization trends in the U.S. by dividing states into three income level groups (high, middle, and low). • Determines the turning points of inter-state deindustrialization in the U.S. and the difference in the rate of deindustrialization. • Conducts both time-series and panel data methodology. • Results show that the phenomenon of premature deindustrialization, which is historically observed in developing countries at a very lower GDP per capita income levels than developed countries, might exist at the regional level even in a developed country. The phenomenon of deindustrialization may emerge in both developed and developing countries. Besides deindustrialization is observable in different regions of a country. This study analyzes inter-state deindustrialization trends in the United States (the U.S.) from 1977 to 2017 by dividing states into three income level groups (high, middle, and low). Instead of specifying the factors, we determine the turning points of inter-state deindustrialization and the difference in the rate of deindustrialization by applying both time-series and panel data methodology. The results suggest that the deindustrialization hypothesis is valid in 38 out of 50 states, DC, and the U.S. at the country level. Furthermore, our results show that deindustrialization curves in lower-income states reach a turning point at lower per capita income levels and at an earlier time-span compared to higher-income state groups. Our findings indicate that premature/early deindustrialization, which is commonly stated for developing countries in the literature is also valid for different regions in a developed country, the U.S. in our case. [ABSTRACT FROM AUTHOR]

• The pandemic-crisis effects on Brazilian manufacturing industries are investigated. • An input-output model is employed to address its sectorial composition and linkages. • The pandemic-crisis has further harmful effects on knowledge-intensive industries. • EIHC promotes high-tech industries, while it showed higher degree of import dependence. • COVID-19 may be crucial to rethink industrial policy space within societal purposes. The COVID-19 crisis represents a turning point to rethink industrial policy spaces and countries' productive autonomy, especially for developing economies, such as Brazil, that call for new ways of thinking about manufacturing within societal purposes. Using an input-output model, the paper explores the pandemic-crisis-effects in the case of the Brazilian manufacturing sector. We find that the pandemic-crisis has harmful effects on the Brazilian productive structure, revealing the dependence on imports of the Brazilian Health System. Reductions in manufacturing gross output and value-added are mainly seen in knowledge-intensive subsectors, followed by job losses and tax revenue reduction. We suggest that the pandemic points to some roads to reindustrialization and resilience, given the reorganization of international production networks and the growing dependence on imports in key manufacturing sectors. Thus, the potential role of the manufacturing sector to achieve inclusive and sustainable growth reveals the importance of building productive capacity beyond the pandemic. [ABSTRACT FROM AUTHOR]

• In Von Thünen (1826) , manufacturing decentralization is refining raw products into final products. • In List (1841) , decentralization can only happen if: savings in transport cost covers the increase in fixed of a second plant. • We update this approach to recent trends of manufacture relocation, labeled as "deindustrialization". In the model of agricultural land use and rent of Von Thunen (1826), manufacturing decentralization is viewed as the refining (or "distilling") of an agricultural commodity near the cultivation site, which substitutes for its transport to an industrial mill located in the Town. As Friedrich List (1841) added, this substitution is economically feasible only if the savings in transport cost following from in site refining cover the increase in fixed costs associated with a second industrial plant. We update this approach aiming to rationalize some stylized trends of manufacture relocation nowadays, which are jointly labeled as "deindustrialization". [ABSTRACT FROM AUTHOR]

• This paper examines the dynamics of deindustrialization in developed countries during the 1970–2015 period, investigating the patterns and factors underlying manufacturing employment growth in 12 developed economies. • The paper shows that deindustrialization is a persistent pattern that experienced a significant structural change in the post-1990 period, in which the acceleration of globalization with the rise of North-South trade appeared to have a significant effect. • Industries with higher relative labour productivity are significantly more resistant to deindustrialization, particularly in the post-1990 period, and this effect is stronger for low-tech industries. • Deindustrialization tends to be more severe in countries with larger populations and a deficit-prone trade balance, and these links have become more pronounced in the post-1990 period. This paper examines the dynamics of deindustrialization in developed countries during the 1970–2015 period, investigating the patterns and factors underlying manufacturing employment growth in 12 developed economies. The study discloses seven key findings with valuable policy insights. In particular, the paper shows that deindustrialization is a persistent pattern that experienced a significant structural change in the post-1990 period, in which the acceleration of globalization with the rise of North-South trade appeared to have a significant effect. Furthermore, industries with higher relative labour productivity are significantly more resistant to deindustrialization, particularly in the post-1990 period, and this effect is stronger for low-tech industries. In addition, deindustrialization tends to be more severe in countries with larger populations and a deficit-prone trade balance, and these links have become more pronounced in the post-1990 period. [ABSTRACT FROM AUTHOR]

The participation of manufacturing in the GVA of many advanced economies is continuously decreasing. The purpose of this work is to contribute to the dialogue around the drivers of such trend. In order to do so, we use input-output analysis for decomposing the variation in the manufacturing share as the sum of the effects of the variation of various possible drivers of deindustrialization: prices, domestic demand, technology and external trade; and we calculate these effects through a dynamic-hierarchical structural decomposition analysis. As a result of the analysis, we identify certain regularities: (a) variations in prices and domestic demand are the two most important factors explaining deindustrialization; (b) a process of substituting domestic production by imports also contributes to deindustrialization; (c) exports make a positive contribution to the participation of manufactures in the GVA but, after the 2008 crisis, this contribution does not offset the negative contribution of substitution by imports. [ABSTRACT FROM AUTHOR]

• There is no evidence supporting invariant tendencies in deindustrialisation. • Sectoral technological opportunities and learning regimes matter. • A diversified employment structure fosters catching-up. • Globalization accelerates deindustrialization and hinders development opportunities for most. Contrary to the notion of a natural tendency in deindustrialization, this paper, performing a cross-country long-term analysis, documents the existence of a variety of patterns of deindustrialization. Looking at industrial sectors and their technological characteristics, categorised on the ground of the Pavitt (1984) taxonomy, we do find a markedly uneven process of deindustrialization with Science Based and Specialised Suppliers not presenting any inverted U-shaped pattern, neither in employment nor in value added. The heterogeneity holds both for the four Pavitt aggregates and under further disaggregation at industry level. We then study whether the uneven sectoral composition had an impact on the timing of deindustrialization. Overall, our analysis supports the notion that "microchips" are not "potato chips" in their influence on the patterns of long-term economic development of different countries. Moreover, during the phase of globalization the probability for low-income countries to be stuck to produce "potato chips" has increased and that of transition toward the production of "microchips" has been reducing. [ABSTRACT FROM AUTHOR]

Developing economies with high levels of open or hidden unemployment face structural transformation problems. Unlike in mature economies there are no structural aggregate demand problems, and sustained aggregate demand stimulus can lead to a profit squeeze in the modern sector and deindustrialization. Adaptations of 'functional finance' to developing economies should aim to stabilize the level and composition of demand at values that are consistent with a target rate of growth of the modern sector. Populist temptations, however, may lead to deindustrialization. [ABSTRACT FROM AUTHOR]

• We study the aggregate consequences of a declining manufacturing employment share. • Our sample covers 20 selected OECD countries over the 1990–2014 period. • We consider policies to attenuate negative employment and growth impacts. • Lowering business regulations is a useful policy to reduce negative consequences. • Job market training in conjunction with low business regulations is preferred. The paper provides new evidence on policy options to deal with the impact of deindustrialization, as defined in terms of a drop in manufacturing employment, for a panel of 20 early OECD countries on annual data from 1990 to 2014. We explore how key economic indicators, among them per capita GDP growth and various unemployment rates, have responded to deindustrialization. Our main contribution is to explore the role of economic flexibility and some key labor market interventions in shaping the impact of deindustrialization on these indicators. We find that lowering the cost to start a new business is a particularly useful policy to combat rising unemployment and losses in GDP growth in this context. But we also show that economic flexibility alone is not sufficient to achieve good macroeconomic outcomes. Job market training in conjunction with flexibility appears to be the preferred policy choice. [ABSTRACT FROM AUTHOR]

• Hazard-based duration model is used to investigate the association of the occurrence of the turning point of environmental Kuznets curve (EKC) with the process of differ types of (de)industrialization. • The speed to reach the turning point for the deindustrializers is 1.96 times faster than for the industrializers. • The countries experiencing nonpremature and positive deindustrialization are around three times faster than the industrializers to leave the state of environmental deterioration. Given the inverted U-shaped relationship between environmental quality and economic development, there exists a turning point which implies a transition from the state of environmental deterioration to the state of environmental improvement. We provide an investigation on the association of the occurrence of the turning point of environmental Kuznets curve (EKC) with the process of (de)industrialization. Hazard-based duration model is employed to study whether and when the turning point occurs from different perspectives of the (de)industrialization process. The results show that the speed to reach the turning point for deindustrializing countries is 1.96 times faster than that for industrializers. With regard to different types of deindustrialization, the speed to reach the turning point for countries experiencing nonpremature deindustrialization and positive deindustrialization increase by 3.57 times and 2.60 times respectively compared to the industrializers. Moreover, technological progress is positively related with the speed to reach the turning point. [ABSTRACT FROM AUTHOR]

• The causes presented in the literature of the middle-income trap are generic, emphasizing the quality of the legal institutions of the country, demographic problems, the lack of social infrastructure, poor macroeconomic policies, etc. were already present in developing countries when they were growing fast. Besides, the income interval used on the studies on the trap was too large. • Instead of promoting the growth, the liberalizing reforms, which were more radical in Latin America than in Asia, caused an increase in the interest rate and dismantled the mechanism that neutralized the Dutch disease – both facts leading to the chronic overvaluation of the exchange rate, which represented a competitive disadvantage of the companies utilizing the best technology available. • In the economic literature, it is well established that the currencies of the commodity-focused economies tend to be appreciated in the long run because they face the Dutch disease. On the other hand, central banks in the region tend to define a high interest rate around which they organize their monetary policy so as to attract foreign capital and "grow with external savings" – this representing a second major cause of overvaluation of the national currencies of Latin American countries. • The main conclusion of the research is that, in the period of 1980–2016, the Latin American countries didn't fall into middle-income but a liberalization trap; the reason why they have fallen into quasi-stagnation while Asian countries did not lie in the liberal reforms. Opening trade in countries that have the Dutch disease meant dismantling the pragmatic mechanisms that neutralized it; financial liberalization limited the ability of countries to control distorted flows of capital and created conditions for the increase in the interest rate. • The instrument to neutralize the Dutch disease on the domestic market side were import tariffs on manufactured goods. To the extent that they were just neutralizing the Dutch disease, they were not protectionist – they were just giving the local manufacturing industry equal conditions of competition with the companies of other countries. If the import tariffs on manufactured goods were higher than what was required to neutralize the Dutch disease, they would be also protectionist. This paper offers an alternative explanation to the slow-down observed in the growth of developing countries. Instead of a middle-income trap what happened was a liberalization trap. Growth didn't happen because countries turned middle-income, but happened in a given period, around the 1980s, when these countries faced a serious foreign debt crisis and were constrained to open their economies. The studies on the middle-income trap have adopted a broad income interval and were unable to offer new historical facts that explained why these countries stop growing fast. Differently, this paper shows that the trade liberalization and the financial liberalization that started in the 1980s involved the dismantling of the mechanism that neutralized the Dutch disease and the change from low to high interest rates – both facts leading to a long-term or chronic overvaluation of the exchange rate that made the manufacturing industry non-competitive and caused deindustrialization and low growth. [ABSTRACT FROM AUTHOR]

Highlights • Effects of trade liberalization on manufacturing export transformation in central European new EU member states are examined. • Alternative export evolution scenarios over 1990–2015 period are constructed using synthetic control method. • Trade liberalization of 1990s improved export performance, quality and technological intensity of exports. • The magnitude of effects depends on the speed of trade liberalization. • Robustness of findings is confirmed with sensitivity analysis. Abstract Prior to 1990s Baltic and Central European new member states of the European Union (NMS) have mainly exported to markets of other centrally planned economies. The exception from this were Croatia and Slovenia whose more liberal institutional setting and existence of economic relationships with market economies resulted in sizeable portion of exports being directed to Western European markets. The aim of this paper is to explore the effects of trade liberalization with European Union on changes in the structure and quality of exports from NMS in the period 1990–2015. Results obtained using synthetic control method (SCM) signal that the timing of trade liberalization with the European Union shaped the evolution of export performance, structure and quality of exports from NMS. The most advanced NMS managed to reap full benefits of preferential access to EU markets. The effects on countries that later embarked on this process, Slovenia and in particular Croatia have been several times smaller. Trade liberalization increased quality of exports and the share of high technology intensive industries in its structure across all NMS. Robustness of findings is confirmed through sensitivity analysis. [ABSTRACT FROM AUTHOR]

Highlights • The imported inputs are incorporated into a structural decomposition analysis (SDA). • This approach is important in evaluating the net impacts of trade liberalization. • Brazilian high-tech exports growth was compensated for by imported inputs growth. • Agriculture, mining, and transportation were the most benefited sectors in Brazil. • The Korean, Chinese, and German high-tech sectors benefited the most. Abstract This study extends structural decomposition analysis (SDA) to consider the substitution between domestic and imported inputs. The approach provides a detailed investigation of the consequences on economic growth following changes in countries’ supply chains. We apply the method to data from Brazil and other countries. The results suggest that the substitution of imported for national inputs is a key factor in SDA, assuming that the impact of technological change is underestimated if this substitution is not taken into account. The findings also show that the substitution of imported inputs is essential to understanding the Brazilian growth path in the 2000s. The positive impact of export growth on total output was offset by the increase in imported inputs, especially in highly technological sectors. The results in Brazil stand in contrast with those in Korea, China, and Germany, where high-tech sectors benefited the most from the substitution. [ABSTRACT FROM AUTHOR]

This paper theoretically constructs a simple model to study the effect of the structure of employment on the external trade balance. The paper illustrates that when the share of employment in services increases, the external trade deficit also increases, and this occurs due to the direct effect of the income and the indirect effect of the productivity. Empirically, the paper analyzes the effects of the structure of employment upon the external balance of goods and services in the panel dataset of 137 developing and developed countries for the period from 1960 to 2011. The paper finds that the external trade deficit has been rising with a higher share of the employment in services. [ABSTRACT FROM AUTHOR]

Over the last decades, the Western world has seen millions of relatively well-paid manufacturing jobs disappear. Some have shifted to low-income countries, while other have been permanently lost due the introduction of labor-saving technologies. Concurrently, many comparatively low-wage jobs have been created in services, for example in fast food and retailing. This paper uses a dynamic panel of 27 high and middle income countries from 1991 to 2014 to estimate the effects of declining industrial employment shares on income inequality. The analysis shows that industrial employment is significantly negatively associated with income inequality. Additionally, the results suggest that it is the middle-earners that have borne the largest burden in terms of inequality increases. [ABSTRACT FROM AUTHOR]

A strand of empirical research on deindustrialization seeks to quantify the relative importance of the economic forces behind deindustrialization, and especially of the internal and external factors, i.e. those linked to globalization and trade. The results of this literature are highly fragile, arguably because the commonly used indicators of trade are not well defined to capture the contribution of globalization to deindustrialization. While this empirical study does not necessarily contradict the widespread belief that the internal factors are quantitatively more important in accounting for deindustrialization in the OECD taken as a whole, our empirical results – based on panel data for 15 OECD advanced countries from 1970 to 2006 – nevertheless show that global exchanges have the potential to affect significantly and substantially a country’s sectoral patterns of employment. They also suggest that the contribution of globalization, and especially of growing North-South integration, to deindustrialization in advanced countries may be revised upwards when resorting to better-suited indicators of trade. [ABSTRACT FROM AUTHOR]

Abstract: This paper investigates how the employment shift from manufacturing toward service sectors affects the rate of economic growth when services play their role both in intermediate and in final demand. Our model includes as a special case both Baumol’s [Baumol, W.J., 1967. Macroeconomics of unbalanced growth: the anatomy of urban crisis. American Economic Review 57 (3), 415–426] model, in which services are produced only for final consumption, and Oulton’s [Oulton, N., 2001. Must the growth rate decline? Baumol’s unbalanced growth revisited. Oxford Economic Papers 53 (4), 605–627] model, in which services are entirely devoted to intermediate demand. We show that, given that the growth rate of productivity in the service sector is lower than that in the manufacturing sector, both the employment share in manufacturing and the rate of economic growth will decline in the long run irrespective of the size of the elasticity of substitution between labor and service input. [Copyright &y& Elsevier]