Drivers of deindustrialisation in internationally fragmented production structures

Martin Lábaj and Erika Majzlíková

Cambridge Journal of Economics, 2022, vol. 46, issue 1, 167-194

Abstract: This paper provides detailed evidence on the extent of outsourcing and offshoring of manufacturing employment and value added using a regional subsystem input–output framework. The paper argues that direct employment and the value-added shares of manufacturing in the totals underestimate manufacturing’s importance. Jobs in manufacturing subsystems accounted for more than 25% of total worldwide employment, in contrast to just 15% recorded in direct statistics. In major developed countries, the level of intersectoral outsourcing reached its upper limit at the beginning of the new millennium. At the same time, the offshoring of activities interlinked with manufacturing has become the dominant driver of deindustrialisation in these countries. While direct manufacturing employment and intersectoral outsourcing declined between 2000 and 2014, offshoring experienced a significant increase of 6.5 percentage points, from 29% to 35.5% of the total employment generated under the G7 manufacturing subsystem. Furthermore, 84% of the value added that existed to meet the final demand for manufactured products in G7 countries remained in G7 countries, while most of the jobs needed to meet G7 final demand have been offshored to developing countries. The paper concludes that the importance of manufacturing subsystems for the world economy did not decline over 2000–14, but there was a significant shift of manufacturing activities and related services from G7 countries to China and other rapidly growing economies.

Keywords: Input–output analysis; Deindustrialisation; Manufacturing; Offshoring (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1093/cje/beab046 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:cambje:v:46:y:2022:i:1:p:167-194.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Cambridge Journal of Economics is currently edited by Jacqui Lagrue

More articles in Cambridge Journal of Economics from Cambridge Political Economy Society Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().