Tuesday, October 15, 2019

Is deindustrialisation a cause for concern Coursework

Is deindustrialisation a cause for concern - Coursework Example The first and foremost negative impact of deindustrialization involves transition and reduction in employment trends. With the reduction in industrial capacity of developed economies, the employment levels in these sectors are bound to decrease. The people employed in these sectors will be gradually reduced or eliminated which pose the inevitable problem of unemployment or altering the skill set to adjust themselves to other emerging markets, which particularly involves the service sector. Another major setback of deindustrialization is the growing divide on economic terms that is growing gap between rich and poor in particular. The people who are most reliant upon manufacturing sectors are the ones who will suffer most when there is a transition of manufacturing economy to a service sector-based economy. While this group of people will suffer most economically, who will find themselves either out of employment or willing to work on very low wages just to keep the ball rolling, on th e other hand will be people who are already working in the service sector and face better prospects in future as the sector grows. This is what happened in Detroit where deindustrialization has resulted in an increase in unemployment and growing divide between rich and poor. Detroit was famous for its automotive industry and with a high proportion of people employed in this industry; the residents enjoyed a high standard of living. This was not for long as Detroit faced deindustrialization and automotive companies soon began to migrate to the southern US states or other countries to take advantage of lower wages. As a result, the people who were employed in this automotive industry faced huge employment crisis and the income per capita in this particular area has been alarmingly low in the recent past. In addition to this, people have started to leave for pastures new to bring an improvement to their deteriorating living standards. As a result of deindustrialization, manufacturing s ector consists of the smallest share of US workforce in more than a hundred years (Boundless, n.d.). The same concept applies with other nations where the inequality has been on a rise with the developed economies such as United States, Unite Kingdom, Japan, France and Germany focusing on value added products, particularly services. On the other hand have been the developing and industrializing nations such as China, India and Indonesia who focus on manufacturing. The trends indicate that the economic disparity between developed and developing nations have been on a rise due to manufacturing. (International Monetary Fund, 1997) The most significant factor of deindustrialization has however not been discussed much by the analysts, maybe because they have underestimated the potential problem at hand. Although we live in a world of globalization, it must be noted that a fully globalized world on the basis of competitive advantage is just a theory and not practical. This cannot be put i nto practice because a country should be sustainable to meet the demand of at least the important and essential products, for example eatables. It is true that the current economic circumstances require developed nations to turn to value added products such as services. But in order to be a sustainable economy,

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