The Deindustrial Revolution: The Rise & Fall of UK Manufacturing, 1870-2010

Michael Kitson and Jonathan Michie

Working Papers from Centre for Business Research, University of Cambridge

Abstract: This paper considers the evolution of the manufacturing sector in the UK since 1870. It analyses the contribution of manufacturing to national income, employment and trade. From 1870 to 1960, manufacturing played a key role in the development of the economy, undergirding success in other sectors of the economy and securing rising living standards. The subsequent fifty years, from 1960, have witnessed a relative decline of the UK manufacturing sector - relative to other sectors of the economy, and relative to the manufacturing sectors in other countries. The paper considers the thesis that the relative decline of manufacturing is a natural outcome of the development of advanced economies, and the counter-arguments suggesting that decline of UK manufacturing reflected economic weaknesses and structural imbalances. We argue that in the case of the UK, the relative decline of manufacturing has indeed reflected deep-rooted structural problems. In particular there has been a chronic failure to invest in manufacturing, with the UK economy and investment being instead skewed towards short-term returns and the interests of the 'City'. A stronger manufacturing sector would help to rebalance the UK economy away from an over-reliance on the banking sector and would help rebalance the UK economy and society in regional terms. To achieve such a rebalancing requires active government policies to help increase investment in education, skills and innovation.

JEL-codes: E60 L16 L52 L60 N13 N14 N63 N64 O25 (search for similar items in EconPapers)
Date: 2014-06
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Citations: View citations in EconPapers (6)

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