Reasons for Factory Relocation: Elements Contributing to Deindustrialization

Reasons for Factory Relocation: Elements Contributing to Deindustrialization

Unveiling Deindustrialization: Causes, Consequences, and the Shift from Physical Labor to Services

Deindustrialization, a term used to describe the decline in the manufacturing sector's contribution to the economy, is a natural phenomenon that has played out in many developed countries. But in some developing nations, the shift can occur prematurely, leading to negative outcomes.

Über Deindustrialization

Deindustrialization is the economic phenomenon that occurs when the manufacturing sector's significance continues to diminish. Economists measure it using historical trends in the value of manufacturing output as a percentage of Gross Domestic Product (GDP) and the proportion of employment in manufacturing to total employment.

Die Natur der Dinge

As economies develop, they often transition from agriculture-based to manufacturing-based—a process known as industrialization—and then to service-based. This transformation is due to progress in technology, making production more efficient and thus cheaper. Manufacturers are increasingly able to replace human labor with machines and robots, leading to lower costs and, in turn, lower prices for consumers.

Probleme auf strukturelem und externem Boden

In some developing countries, the ideal transition does not materialize. The manufacturing sector declines due to factors such as low productivity, a lack of investment, and being uncompetitive on the global stage. This phenomenon, known as premature deindustrialization, occurs before a country reaches a stage of mature economic development.

Premature deindustrialization can lead to lower per capita income during the industrialization stage, as structural problems such as low investment and innovation hinder the economy from achieving the same prosperity as developed countries.

Ursachen der Deindustrialisierung

There are various theories explaining the causes of deindustrialization. For example, some manufacturers in developed countries struggle to compete with producers from developing countries due to high labor costs, making their products less competitive. Consumers then increase their demand for imported goods, which are cheaper, leading to the closure of various manufacturers in developed nations.

Other manufacturers relocate their factories to developing countries, where labor is cheaper and access to raw materials is more accessible. These manufacturers then focus on services that provide higher added value.

Increased Productivity and Automation

Advances in technology and production methods allow manufacturers to increase output at a more efficient cost, making the manufacturing sector more productive. As a result, manufactured goods become cheaper to purchase.

In comparison, the service sector's labor productivity grew more slowly than the manufacturing sector, causing the prices of manufactured goods to fall relatively faster than services. As a result, the value of manufacturing output as a percentage of GDP decreases not because output declines but due to falling prices.

International Trade Specialization

Deindustrialization also occurs as countries pursue specializations in which they have a competitive advantage. Developed countries focus on the service sector and maintain strategic manufacturing, such as industrial goods and high technology. Meanwhile, developing countries are transitioning from agriculture-based to less capital-intensive manufacturing-based, processing agricultural commodities into higher-value products.

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Industrialization brings prosperity to developed countries, resulting in a higher standard of living. With more disposable income, many consumers spend more on services rather than goods. Consumers can also enjoy cheaper manufactured goods due to increased productivity in the manufacturing sector and lower costs from imports.

As a result, spending on manufactured goods as a percentage of GDP declines, while spending on services increases.

Unkompetitivität

High prices can make manufacturers less competitive. As a result, their export sales decline because they cannot compete with manufacturers from other countries who are more competitive in the international market. In the domestic market, manufacturers face the pressure of cheaper imported goods, leading to the closure of various businesses.

Zunehmende Handel und Konkurrenz

Trade liberalization increases competition for manufacturers in both international and domestic markets. As a result, manufacturers in various countries, such as China, find it easier to sell their products to international markets, undermining less competitive domestic manufacturers.

Flucht des Kapitals und Outsourcing

Political shocks or unfavorable government and economic policies can force manufacturers to withdraw their investments, causing capital flight. Relocation can also occur as a business adopts a strategy to specialize—known as offshoring.

For example, General Motors closed a US plant in Michigan and opened a plant in Mexico. They increase their profits by shifting production to low-cost countries, then focus on service, which has higher value-added.

Währungs fluctuations

An acute and prolonged appreciation of the exchange rate can threaten domestic manufacturers. In addition, domestic manufactured goods become more expensive when sold overseas. As a result, foreign buyers decrease their demand for them.

Conversely, appreciation makes the price of imported goods cheaper. Domestic buyers then favor imports over domestic goods.

Such conditions encourage domestic consumers to shift their demand to imported manufactured goods. As a result, domestic manufacturing businesses lose out in the competition and ultimately shut down.

Niedriger Investition in der industrie

Another factor contributing to deindustrialization is a decline in new investment in the manufacturing sector. As a result, fewer production facilities are built, and fewer new jobs are created. Furthermore, accumulated capital goods grow slowly, and manufacturers rely on old, less productive capital goods.

Low new investment can occur due to various combinations, such as unfavorable investment climates, poor economic policies, or weak business performance.

WEITERE INFORMACTIONEN

• Stärken und Schwächen der Deindustrialisierung bei der Beschäftigung, dem Umwelt und dem Wachstum

Zusätzliche Informationen:

The negative deindustrialization experienced by developing countries is driven by a combination of economic, technological, and global structural factors. The main contributing factors include:

1. Globalisierung und internationale Handelssdruck
2. Globalisierung hat die Konkurrenz intensiviert, indem es Firmen erlaubt, ihre Produktion in Ländern mit günstigerer Lohntariflage und besserer Geschäftsumgebung zu verlagern. Dies erhöht die Konkurrenz und kann die Heimatindustrie in Entwicklungsständern unterlaufen, wenn diese nicht erfolgreich im Preis- oder Produktivitätswettbewerb sind [1].
3. Internationale Handelsabkommen begünstigen den Handel von Waren, aber auch die Exposition nationaler Industrien zum globalen Marktvolatilität und Wettbewerb, was zum industriellen Rückgang beiträgt [2].
4. Technologische Fortschritte und Automatisierung
5. Fortschritte in der Automatisierung und Robotik haben die Produktivität der Herstellung erhöht, was die Nachfrage nach Arbeitskräften reduziert. Diese Technologien machen die Herstellung weniger arbeitsintensiv, was die Fähigkeit einschränkt, breite Beschäftigungsmöglichkeiten in Entwicklungsländer zu schaffen [1][3].
6. Die Dienstleistungswirtschaft ist auch erwartet, von technologischer Störung betroffen zu sein, wie künstliche Intelligenz, was den Anspruch auf Beschäftigung außerhalb der Herstellung weiter herausfordernd macht [3].
7. Verschiebungen globaler Wirtschaftsmacht
8. Länder wie China und Indien sind aufstrebende Herstellungshubs, was zu einer Veränderung globaler Handelsmuster und den Rückzug von anderen Entwicklungsländern oder traditionellen Industriebasen führt [1].
9. Vorzeitige Deindustrialisierung Phänomen
10. Viele Entwicklungsländer erleiden Deindustrialisierung auf niedrigeren Einkommenstufen und früheren Entwicklungsstadien als historische Muster in entwickelten Ländern. Diese frühe Rückgangsetappe behindert traditionellen Wachstumswegen, in denen die industrielle Wachstumsset dontreibt Wachstum und Armutsbekämpfung [3].
11. Technologische Veränderungen haben es schwer gemacht, dass diese Länder länger auf einer arbeitsintensiven Herstellung als Wachstum- und Beschäftigungsstrategie setzen können, was zu Stagnation oder Rückgang in industriellen Sektoren führt [3].
12. Umwelt- und structurelle wirtschaftliche Herausforderungen
13. Klimawandel und die Notwendigkeit nach grünen Transitionen sowie die abnehmende Nachfrage nach Rohstoffen further constraint industriellen Wachstum in Entwicklungs- und Rohstoffelndern abhängig [3].
14. regionale wirtschaftliche Ungleichheiten und die Verfallslage von Städten können die negativen Auswirkungen von Deindustrialisierung auf Gemeinden weiter verschärfen, die im Geschehen sind.
15. Schwache Grundnachfrage und wirtschaftliche Politik
16. Einige Länder befinden sich in einer Nachfragekrise, die veranlasst, dass Firmen suchen, in welchen Märkten sie bedientsen können. Während die Internationalisierung das Wettbewerbsniveau unterhalten kann, kann sie auch das industrielle Wachstum in den entwickelten Ländern beschleunigen, indem es die Produktion ins Ausland verschiebt und die Beschäftigung in der industriellen Sektoren reduziert [4].
17. Wirtschaftspolitiken wie den Handelsliberalisierung und die Entregulierung, die auf Effizienz und Integration abzielen, können auch zur Deindustrialisation beitragen, indem sie nationalen Industrien den Wettbewerb ohne ausreichende Schutzmaßnahmen oder Unterstützung für industrielle Modernisierung denaussetzen [2].

In Zusammenfassung erfährt die negative Deindustrialisierung in Entwicklungsländern aus globalisierung treibenden Wettbewerbsdrücken, technologischem Wandel, die Senkung der Arbeitskräfteintensität, Verschiebungen globalen Wirtschaftsmacht, vorzeitigen Deindustrialisierung Muster, Umweltschrankungen und schwache wirtschaftliche Nachfrage—Kombinationen zusammen mit einem wirtschaftspolitischen Umfeld, das manchmal nicht in einer nachhaltigen industriellen Entwicklung unterstützt [1][2][3][4].

1. Deindustrialization in developing countries occurs due to a combination of factors, including intense global competition that enables companies to move production to countries with lower wages and better business environments, thereby increasing competition and undermining domestic industries that are not successful in price or productivity competition.
2. Global trade agreements facilitate the trading of goods but also expose national industries to global market volatility and competition, which contributes to industrial decline. Additionally, technological advancements in automation and robotics have increased manufacturing productivity, reducing the demand for labor. This technology makes manufacturing less labor-intensive, limiting the ability to create widespread employment opportunities in developing countries.

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