Deindustrialization and Global Economic Shifts in Manufacturing

Deindustrialization

Process by which manufacturing & related industries move out of a region.

Outsourcing

Delegating functions or tasks to a third-party vendor.

Offshoring

Outsourcing abroad.

New International Division of Labor

Allocation of various parts of the production process to different places in the world.

Core Countries

Countries that exploit peripheral countries for their natural resources and cheap labor.

Peripheral Countries

Countries that are exploited by core countries for their natural resources and cheap labor.

Comparative Advantage

Country: make what it is best at & import what is not efficient to produce.

Special Economic Zones (SEZs)

Area in a country that is designed to generate positive economic growth.

Maquiladoras

Export Processing Zone: industrial estates that are fenced in for producing manufactured goods for export.

Emerging Industrial Regions

Regions that have seen significant growth in industrial output, shifting from traditional centers.

Foxconn

Largest electronics contractor supplying chips & other electronic components to major companies.

Port of Savannah

Fastest growing port in Southeastern US (2025).

Global Export Value Trends

Trends in global export value of trade in goods from 1950 to 2022 (in billion U.S. dollars).

Working Conditions at Foxconn

Conditions that have been scrutinized due to the large employment and production scale.

International Trade

Essential for countries as no country can produce everything it needs at reasonable prices within its borders.

Multinational Corporations

Companies that operate in multiple countries, often involved in outsourcing.

Industrialization of Developing World

The process by which parts of the developing world have begun to industrialize.

Spatial Divisions of Labor

The distribution of different tasks in the production process across various locations.

Lower Wages in SEZs

One of the reasons for the establishment of Special Economic Zones.

Lower Taxes in SEZs

Another incentive for the establishment of Special Economic Zones.

Weaker Safety & Environmental Regulations in SEZs

A characteristic of Special Economic Zones that attracts businesses.

Repress Unions in SEZs

A practice in Special Economic Zones to maintain lower operational costs.

Benefits of Maquiladoras

Cost savings, a skilled workforce, and proximity to the U.S. market.

Challenges of Maquiladoras

Legal complexities, supply chain risks, labor union issues, environmental concerns, and currency exchange risks.

Free Trade

An ideal situation where individuals and companies in different countries can buy and sell goods to and from each other without any interference from governments.

Goals of Free Trade

Increase variety and reduce cost of goods, generate job growth (long term goal), and improve relations between countries.

Immediate Goals of Free Trade

Protecting struggling domestic industries by putting up trade barriers.

Free Trade Agreements

An agreement between two or more countries to reduce trade barriers, allowing for easier buying and selling of goods and services across borders.

NAFTA

North American Free Trade Agreement, now replaced by USMCA, with not much change.

Factors Underlying Decline of Manufacturing

Higher costs of wages in developed countries compared to developing countries.

Investment in Education and Skills

Many developing countries have made investments in education, now rivaling Europe, North America, and Japan in skills and productivity.

Technological Changes in Manufacturing

Reduces the number of workers needed for output.

US Manufacturing Jobs

The US loses manufacturing jobs, but output has stayed constant and has now increased.

Inadequate Public Investment

Lack of public investment in education and infrastructure leading to shortages of human capital and high transportation costs.

Deindustrialization of Liverpool

By the 1970s, Liverpool's days as the largest port in the UK were numbered, with 200,000 jobs disappearing as it deindustrialized.

Deindustrialization of Manchester

Manufacturing employed over half of the Greater Manchester workforce in 1959; today it accounts for fewer than one-in-five jobs.

Deindustrialization of Cardiff

Once the world's second-biggest coal-exporting port, Cardiff suffered from the decline of the Welsh coal and steel industries in the 1950s.

Impact of Deindustrialization

Between 1974 and 2005, advanced industrial countries lost 35 million jobs, while newly industrializing countries gained 29 million.

Newly Industrialized Countries (NICs)

Countries that first engage in unskilled, light manufacturing, then move to skilled, higher-value-added manufacturing.

Uneven Development

The continuing process of deindustrialization in the West corresponding with industrialization in developing countries.

Global Trade Changes

Massive changes in global trade that reshape the lives of hundreds of millions of people.