Geography Reference
In-Depth Information
rapid economic growth in advanced countries is in this sector. As statistical data
show, employment shifts continuously into services in the advanced
economies. We will concentrate, therefore, on these advanced economies and their
service sectors; there are large service sectors in many poor countries, but these
do not generally include service industries producing for export markets and
driving the respective national economies. Often, in fact, they are of low
productivity in the informal sector in the cities, serving as provider of poorly
paid jobs for those unable to gain full-time regular employment. This does not
negate their important social role, often as a training ground for migrants from
the countryside who are able to learn urban ways through working in these
activities, but it does exclude them from a central developmental role.
As
Table 5.1
shows, there is a normal course of events followed by most
countries over a period of time, which sees the transition from dominance of the
primary sector, to the secondary sector, and in the later stages, to the tertiary and
quaternary sectors. Some countries certainly do show a tendency to delay their
manufacturing decline, such as Japan and Germany. These countries have been
particularly well endowed with human and physical resources for a
manufacturing role, and have certainly been able to manufacture successfully for
world markets from a home base. It is none the less the case that even in such
countries, the role of manufacturing, in employment and also as a proportion of
GNP, declines eventually and is balanced by a concomitant rise of the service
sector. This deindustrialization shift can be seen at the regional level too. In the
USA (Rodwin 1989) the decline of industry was first observed in New England
and the northern Appalachians, in the 1950s and 1960s. Later, the 1970s saw
decline of manufacturing in the middle Atlantic states, Virginia, Maryland and
Delaware. In the 1980s, the change was affecting the industrial Mid West, in
such states as Ohio and Michigan. This “hollowing out” of the North American
industrial regions has generally been viewed with alarm, although Rodwin shows
it to be a predictable process.
There are different explanations of this deindustrialization. A “post-industrial”
view is that manufacturing declines: (a) because of higher productivity and
capital investment in this sector compared with services (in other words,
manufacturing does not create jobs although industrial production grows); and (b)
because of a constantly expanding demand for services, compared with
manufacturing, at higher levels' of income—the economist terms this a higher
elasticity of demand (Rodwin 1991). Another interpretation is in terms of the
expanding role of the multinational corporations, which can shift investments
rapidly out to the developing (and cheap) countries, leaving central countries
with just the firms' head offices. Yet another explanation is in terms simply of
the shifting balance of comparative advantage for trade, so that the LDCS become
better able to compete in manufacturing and cause it to shift out towards them
(Beenstock 1983). This is really the same concept as the MNC argument, but not
focusing on the firm. In the USA, the shift has also been interpreted as a shift
from the “Rustbelt” (the name given to the cold northeast because of the
