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

Author

Listed:
  • Michael Kitson
  • Jonathan Michie

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.

Suggested Citation

  • Michael Kitson & Jonathan Michie, 2014. "The Deindustrial Revolution: The Rise & Fall of UK Manufacturing, 1870-2010," Working Papers wp459, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp459
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp459.pdf
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    References listed on IDEAS

    as
    1. Kitson, Michael & Michie, Jonathan, 1996. "Britain's Industrial Performance since 1960: Underinvestment and Relative Decline," Economic Journal, Royal Economic Society, vol. 106(434), pages 196-212, January.
    2. Broadberry, S. N. & Crafts, N. F. R., 1990. "The impact of the depression of the 1930s on productive potential in the United Kingdom," European Economic Review, Elsevier, vol. 34(2-3), pages 599-607, May.
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    More about this item

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N63 - Economic History - - Manufacturing and Construction - - - Europe: Pre-1913
    • N64 - Economic History - - Manufacturing and Construction - - - Europe: 1913-
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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