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Transcript of Deindustrialization
The European Union and Japan Revision Unit: David Ricardo
2 countries, each with comparative advantage in one product
Export: win/win situation In the long run this leads to concentration of the countries in the field where they have the comparative advantage - specialization
Consequence: win/lose situation for industries on which the country concentrates Deindustrialization
Decline in employment in manufacturing as a share of total employment in the world´s most advanced economies
Critics of international trade say:
Deindustrialization has emerged due to rising international trade between developed and developing countries, which results in a shift of manufacturing jobs to developing countries
Increase in service expenditure at the expense of manufacturing expenditure?
Slower productivity growth
in service sector than in manufacturing Summary
From 70s on decline in manufacturing jobs in the U.S., Japan and the EU: Deindustrialization
Deindustrialization is not a negative consequence of trade, but a natural consequence of further growth in advanced economies.
The shift of jobs from manufacturing into service sector is due to the faster growth of productivity in manufacturing than in services.