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June, 1986, Vol. 109, No. 6
and the shift to services
Much discussion and concern recently has been focused on the deindustrialization of the United States and the need for a national industrial policy.1 The well-reported growth in employment in the service sector and the relative decline in employment in manufacturing industries implies to some a decrease in our industrial capacity. The deindustrialization argument points to a lack of investment in basic production, plant closings and layoffs, and the large negative merchandise trade balance as evidence that the United States is losing its manufacturing base.
But precisely how can deindustrialization be defined? Does the shift to a service economy imply the erosion of an industrial base? Should deindustrialization be described as a loss of manufacturing jobs or should production changes also be a criterion? Should these changes be measured in absolute terms or relative terms? These are some of the questions we examine in this article by reviewing data on both employment and production for manufacturing and other major sectors, first as a whole, and then for detailed industries.
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1 See, for example, Barry Bluestone and Bennett Harrison, The Deindustrialization of America (Basic Books, Inc., 1982); Robert B. Reich, "Industrial policy," New Republic, Mar. 31, 1982; "Do we need an industrial policy?" Harper's, February 1985; "The hollow corporation," Business Week, Mar. 3, 1986; and numerous other articles.
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