Deindustrialization

Bethlehem Steel in Bethlehem, Pennsylvania, one of the world's leading steel manufacturers for most of the 20th century, discontinued most of its operations in 1982, filed for bankruptcy in 2001, and was dissolved in 2003.

Deindustrialization is a process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region, especially of heavy industry or manufacturing industry.

Research has pointed to investment in patents rather than in new capital equipment as a contributing factor. At a more fundamental level, Cairncross and Lever offer four possible definitions of deindustrialization:

  1. A straightforward long-term decline in the output of manufactured goods or in employment in the manufacturing sector.
  2. A shift from manufacturing to the service sectors, so that manufacturing has a lower share of total employment. Such a shift may occur even if manufacturing employment is growing in absolute terms
  3. That manufactured goods comprise a declining share of external trade, so that there is a progressive failure to achieve a sufficient surplus of exports over imports to maintain an economy in external balance
  4. A continuing state of balance of trade deficit (as described in the third definition above) that accumulates to the extent that a country or region is unable to pay for necessary imports to sustain further production of goods, thus initiating a further downward spiral of economic decline.
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