Social Sciences, asked by ronit4138, 1 year ago

what is de-industrilization?explain process in breif

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Answered by suhanisuryawanshi29
2
Deindustrialization or deindustrialisationis a process of social and economic change caused by the removal or reduction of industrial capacity or activity in a country or region, especially heavy industry or manufacturing industry

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Answered by Tina11111
0
Deindustrialisation involves a decrease in the relative size and importance of the industrial sector in an economy. It may involve a decrease in the absolute size of industry or it might just mean that manufacturing/industry takes a smaller share of GDP and employs a smaller % of the workforce.

Deindustrialisation will invariably involve an increase in the importance of the service sector to take the place of industry.

Reasons for deindustrialisation

Services are a luxury good. As incomes rise, people can afford more personal services, which have a higher income elasticity of demand. If your income rises to £20,000 you can buy a car (manufacturing sector), but if your income rises by even more, you may be able to afford more taxi rides (services) or even employ a chauffeur. Since 1945, western economies have generally seen a significant rise in real incomes due to positive economic growth. This has led to growing service sector industries, such as tourism, cafes, retail and also financial services like pensions. As a result, spending on manufactured products has fallen as a % of total GDP, instead, we spend relatively more on services.

Shifting comparative advantage. Manufacturing goods tend to be quite labour intensive. Rising labour costs in advanced industrial countries mean that there is a long-term shift in comparative advantage. It becomes relatively cheaper to import these manufactured goods from low-cost labour producers in S.E. Asia/Central America. In recent years, the UK has lost comparative advantage in industries, such as clothing, electrical manufacturing and developed a comparative advantage in financial services. Multinationals have often outsourced production from advanced economies to emerging economies with lower labour costs.

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