IDEAS home Printed from https://ideas.repec.org/p/wfo/wpaper/y2016i506.html
   My bibliography  Save this paper

De- versus Re-industrialisation: Is Structural Change Reversible?

Author

Listed:
  • Michael Peneder
  • Gerhard Streicher

Abstract

We investigate the causes of de-industrialisation and potential for re-industrialisation. Using WIOD data and introducing new measures of "induced value added chains", we directly relate a sector's income share to the net value added flows as induced by domestic and foreign final demand. This method identifies the declining share of manufacturing in domestic expenditures on final demand to be the main cause of de-industrialisation. International trade has a limited impact, though differences in comparative advantage between countries do matter. In addition, the strong decline of relative prices in manufacturing points to an interesting policy paradox: precisely if successful in raising competitiveness and hence productivity growth of manufacturing, they also further its global decline of relative prices. Contrary to the stated objective of re-industrialisation, meaningful industrial policies will accelerate de-industrialisation in the global economy. To raise the income share of manufacturing, policies must target, e.g., competition and productivity growth in services.

Suggested Citation

  • Michael Peneder & Gerhard Streicher, 2016. "De- versus Re-industrialisation: Is Structural Change Reversible?," WIFO Working Papers 506, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2016:i:506
    as

    Download full text from publisher

    File URL: https://www.wifo.ac.at/wwa/pubid/58595
    File Function: abstract
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, vol. 104(2), pages 459-494, February.
    2. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    3. Mario Pianta, 2014. "An industrial policy for Europe," Working Papers 1401, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2014.
    4. Marcel P. Timmer & Bart Los & Robert Stehrer & Gaaitzen J. de Vries, 2013. "Fragmentation, incomes and jobs: an analysis of European competitiveness [Who captures value in global supply chains?]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 28(76), pages 613-661.
    5. Michael Peneder, 2017. "Competitiveness and industrial policy: from rationalities of failure towards the ability to evolve," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 41(3), pages 829-858.
    6. Berger, Suzanne with the MIT Task Force on Production in the Innovation Economy, 2013. "Making in America: From Innovation to Market," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262019914, December.
    7. Kristine Farla, 2015. "Industrial Policy for Growth," Journal of Industry, Competition and Trade, Springer, vol. 15(3), pages 257-282, September.
    8. Gerhard Streicher & Robert Stehrer, 2015. "Whither Panama? Constructing A Consistent And Balanced World Sut System Including International Trade And Transport Margins," Economic Systems Research, Taylor & Francis Journals, vol. 27(2), pages 213-237, June.
    9. Philippe Aghion & Julian Boulanger & Elie Cohen, 2011. "Rethinking industrial policy," Policy Briefs 566, Bruegel.
    10. Koen De Backer & Isabelle Desnoyers-James & Laurent Moussiegt, 2015. "'Manufacturing or Services - That is (not) the Question': The Role of Manufacturing and Services in OECD Economies," OECD Science, Technology and Industry Policy Papers 19, OECD Publishing.
    11. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    12. De Backer, Koen & Miroudot, Sébastien, 2014. "Mapping global value chains," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 37176.
    13. Robert C. Johnson, 2014. "Five Facts about Value-Added Exports and Implications for Macroeconomics and Trade Research," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 119-142, Spring.
    14. Erik Dietzenbacher & Bart Los & Robert Stehrer & Marcel Timmer & Gaaitzen de Vries, 2013. "The Construction Of World Input-Output Tables In The Wiod Project," Economic Systems Research, Taylor & Francis Journals, vol. 25(1), pages 71-98, March.
    15. Foster-McGregor, Neil & Stehrer, Robert, 2013. "Value added content of trade: A comprehensive approach," Economics Letters, Elsevier, vol. 120(2), pages 354-357.
    16. Ken Warwick, 2013. "Beyond Industrial Policy: Emerging Issues and New Trends," OECD Science, Technology and Industry Policy Papers 2, OECD Publishing.
    17. Eoin O’Sullivan & Antonio Andreoni & Carlos López-Gómez & Mike Gregory, 2013. "What is new in the new industrial policy? A manufacturing systems perspective," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 29(2), pages 432-462, SUMMER.
    18. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    19. Michael Peneder & Serguei Kaniovski & Bernhard Dachs, 2003. "What follows tertiarisation? structural change and the role of knowledge-based services," The Service Industries Journal, Taylor & Francis Journals, vol. 23(2), pages 47-66, March.
    20. Marcel P. Timmer & Abdul Azeez Erumban & Bart Los & Robert Stehrer & Gaaitzen J. de Vries, 2014. "Slicing Up Global Value Chains," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 99-118, Spring.
    21. Karl Aiginger, 2007. "Industrial Policy: A Dying Breed or A Re-emerging Phoenix," Journal of Industry, Competition and Trade, Springer, vol. 7(3), pages 297-323, December.
    22. Bart Los & Marcel P. Timmer & Gaaitzen J. Vries, 2015. "How Global Are Global Value Chains? A New Approach To Measure International Fragmentation," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 66-92, January.
    23. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Adrián Rial & Rafael Fernández, 2023. "Does tertiarisation slow down productivity growth? A Kaldorian–Baumolian analysis across 10 developed economies," Metroeconomica, Wiley Blackwell, vol. 74(1), pages 188-222, February.
    2. Murat A. Yülek, 2017. "On the Middle Income Trap, the Industrialization Process and Appropriate Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 17(3), pages 325-348, September.
    3. Gruber, Harald, 2017. "Innovation, Skills and Investment: A Digital Industrial Policy for Europe," 28th European Regional ITS Conference, Passau 2017 169464, International Telecommunications Society (ITS).
    4. Martin Labaj & Stracova Erika, 2019. "Drivers of Deindustrialisation: Sub-system Analysis of Internationally Fragmented Production Structures," Department of Economic Policy Working Paper Series 018, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    5. Harald Gruber, 2017. "Innovation, skills and investment: a digital industrial policy for Europe," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(3), pages 327-343, September.
    6. Meurers, Martin & Moenius, Johannes, 2018. "Optimal Public Investment in Economic Centers and the Periphery," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181579, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. João Amador & Sónia Cabral, 2017. "Networks of Value-added Trade," The World Economy, Wiley Blackwell, vol. 40(7), pages 1291-1313, July.
    2. Nenci, Silvia & Fusacchia, Ilaria & Giunta, Anna & Montalbano, Pierluigi & Pietrobelli, Carlo, 2022. "Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2), July.
    3. Kozo Kiyota & Keita Oikawa & Katsuhiro Yoshioka, 2017. "The Global Value Chain and the Competitiveness of Asian Countries," Asian Economic Papers, MIT Press, vol. 16(3), pages 257-281, Fall.
    4. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    5. Kaltenegger, Oliver & Löschel, Andreas & Pothen, Frank, 2017. "The effect of globalisation on energy footprints: Disentangling the links of global value chains," Energy Economics, Elsevier, vol. 68(S1), pages 148-168.
    6. João Amador & Sónia Cabral & Rossana Mastrandrea & Franco Ruzzenenti, 2018. "Who’s Who in Global Value Chains? A Weighted Network Approach," Open Economies Review, Springer, vol. 29(5), pages 1039-1059, November.
    7. Zhu, Zhen & Morrison, Greg & Puliga, Michelangelo & Chessa, Alessandro & Riccaboni, Massimo, 2018. "The similarity of global value chains: A network-based measure," Network Science, Cambridge University Press, vol. 6(4), pages 607-632, December.
    8. Jona-Lasinio, Cecilia & Manzocchi, Stefano & Meliciani, Valentina, 2019. "Knowledge based capital and value creation in global supply chains," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    9. Marta Solaz, 2018. "Value added and participation in global value chains: The case of Spain," The World Economy, Wiley Blackwell, vol. 41(10), pages 2804-2827, October.
    10. Inaki Arto & Erik Dietzenbacher & Jose Manuel Rueda-Cantuche, 2019. "Measuring bilateral trade in terms of value added," JRC Research Reports JRC116694, Joint Research Centre.
    11. Zhao, Yuhuan & Liu, Ya & Qiao, Xiaoyong & Wang, Song & Zhang, Zhonghua & Zhang, Yongfeng & Li, Hao, 2018. "Tracing value added in gross exports of China: Comparison with the USA, Japan, Korea, and India based on generalized LMDI," China Economic Review, Elsevier, vol. 49(C), pages 24-44.
    12. Marilia Marcato & Carolina Baltar & Fernando Sarti, 2019. "International competitiveness in a vertically fragmented production structure: empirical challenges and evidence," Economics Bulletin, AccessEcon, vol. 39(2), pages 876-893.
    13. Amat Adarov & Robert Stehrer, 2021. "Implications of foreign direct investment, capital formation and its structure for global value chains," The World Economy, Wiley Blackwell, vol. 44(11), pages 3246-3299, November.
    14. Heli Simola, 2018. "Chinese Services Gaining Significance in Global Production Chains," Asian Economic Papers, MIT Press, vol. 17(2), pages 50-64, Summer.
    15. Marta Solaz Alamá, 2016. "Cadenas globales de valor y generación de valor añadido: El caso de la economía española," Working Papers. Serie EC 2016-01, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    16. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    17. Cecilia Jona Lasinio & Stefano Manzocchi & Valentina Meliciani, 2017. "Knowledge Based Capital and Value Creation in Global Supply Chains," Working Papers LuissLab 17134, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    18. Marcel P Timmer & Sébastien Miroudot & Gaaitzen J de Vries, 2019. "Functional specialisation in trade," Journal of Economic Geography, Oxford University Press, vol. 19(1), pages 1-30.
    19. Cingolani, Isabella & Iapadre, Lelio & Tajoli, Lucia, 2018. "International production networks and the world trade structure," International Economics, Elsevier, vol. 153(C), pages 11-33.
    20. Amador, João & Cabral, Sónia, 2014. "Global value chains: surveying drivers and measures," Working Paper Series 1739, European Central Bank.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wfo:wpaper:y:2016:i:506. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Florian Mayr (email available below). General contact details of provider: https://edirc.repec.org/data/wifooat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.