DEINDUSTRIALIZATION AS AN OPPORTUNITY FOR GROWTH IN A FINANCIAL CRISIS

Keywords: deindustrialization, economic development, industry, services, economic policy

Abstract

The article is devoted to topical issues of identifying growth opportunities connected with the deindustrialization phenomenon during a financial crisis. It is argued that in the 21st century, the financial crisis due to a global pandemic is a signal to most countries to reconsider their long-term economic development strategies. The purpose of this study is to summarize negative and positive aspects of the "deindustrialization" phenomenon in order to outline and justify long-term growth opportunities for Ukraine's economy. The most relevant achievements of the world's scientific community, which form the theoretical and methodological basis for the analysis of the deindustrialization phenomenon, are analyzed. The main idea of deindustrialization follows from the three-sector hypothesis, according to which, industry shifts are mainly caused by two factors: increasing elasticity of demand for income, and different rates of productivity growth by sector. It is determined that socio-economic consequences of certain forms of deindustrialization must be considered in terms of economic success or failure, and it is necessary to compare the industrial policy in a country with best practices worldwide. It is proposed to define the main manifestations of deindustrialization: a consistent decline in industrial production or employment in the manufacturing sector, which differs from the processes of prolonged cyclical economic recessions; transition from the production of goods to the production of services, in which the share of industria production decreases in the final product, and the share of services increases; reduction of industrial production share in the structure of exports of the country or region; long-term persistence of a trade deficit, which leads to the inability to pay for imports and causes a new round of industrial decline. The necessity of changing the economic policy of Ukraine is substantiated, with a clear goal – technological transformations with a clear definition of technological modernization as national priorities.

References

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Dasgupta S. & Singh A. (2006). Manufacturing, Services and Premature De-Industrialisation in Developing Countries: A Kaldorian Empirical Analysis. Centre for Business Research, Faculty of Economics, Cambridge: University of Cambridge.

Di Berardino C., Doganieri I. & Onesti G. (2021) Deindustrialization in the EU between Transformation and Decline, Eastern European Economics.

Di Meglio G., Gallego J., Maroto, A. & Savona M. (2018). Services in developing economies: The deindustrialization debate in perspective. Development and Change, 49(6), 1495–1525.

EU (2014) Towards an Industrial Renaissance. Available at: https://ec.europa.eu/growth/industry/policy/renaissance_en (accessed September 25, 2020).

Jaililian H. & Weiss J. (2000) De-industrialisation of Sub-Saharan Africa: Myth or Crisis? Journal of African Economies, 9(1): 24–43.

Kaldor N. (1966) Causes of the Slow Rate of growth in the United Kingdom. Cambridge: Cambridge University Press.

Klenner W., & Watanabe H. (2009) Neupositionierung regionaler Führungskräfte: Japan und Deutschland. Bern: Peter Lang.

Kollmeyer C. (2009) Explaining Deindustrialization: How Affluence, Productivity Growth, and Globalization Diminish Manufacturing Employment. American Journal of Sociology, 114(6), 1644–1674.

Klodt H. (2014) Drei Sektoren Hypothese. Available at: http://wirtschaftslexikon.gabler.de/Archiv/58475/drei-sektoren-hypothese-v6.html (accessed September 25, 2020).

Pidchosa O. & Rogach O. (2021) Impact of Deindustrialization on the Structure of the Economy and Labour Market: the Case of Ukraine. Journal Transition Studies Review, 28(1), 3–18.

Przywara R. (2016) Versions of Deindustrialization – A model-based analysis 1973-2008. PhD Thesis, Cheltenham: University of Gloucestershire.

Przywara R. (2017) Deindustrialization – opportunity or threat?. Available at: http://hdl.handle.net/11159/901 (accessed September 25, 2020).

Rodrik, D. (2016) Premature deindustrialization. Journal of economic growth, 21(1), 1–33.

Rowthorn R. & Wells J.R. (1987) De-industrialization and Foreign Trade. Cambridge: Cambridge University Press.

Rowthorn R., & Ramaswamy R. (1999) Growth, trade, and deindustrialization. IMF Staff papers, 46(1), 18–41.

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Published
2020-12-15
How to Cite
Duginets, G. (2020). DEINDUSTRIALIZATION AS AN OPPORTUNITY FOR GROWTH IN A FINANCIAL CRISIS. Economy and Society, (22). https://doi.org/10.32782/2524-0072/2020-22-93
Section
ECONOMICS