Deindustrialization and the Shift to Services

Abstract

Much discussion and concern recently has been focused on the of the United States and the need for a national industrial policy t The well-reported growth in employment in the service sector and the relative decline in employment in manufacturing industries implies to some a decrease in our industrial capacity The argument points to a lack of investment in basic production, plant closings and layoffs, and the large negative merchandise trade balance as evidence that the United States is losing its manufacturing base But precisely how can be defined? Does the shift to a service economy imply the erosion of an industrial base? Should be described as a loss of manufacturing jobs or should production changes also be a criterion? Should these changes be measured in absolute terms or relative terms? These are some of the questions we examine in this article by reviewing data on both employment and production for manufacturing and other major sectors, first as a whole, and then for detailed industries Our findings indicate that the shift to a service economy is not really evidence of a declining industrial base, or deindustrialization . The shift has largely been a relative one Employment in the manufacturing sector in absolute

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