Third World Competition and De-industrialisation in Advanced Countries.

Rapid industrialization in the third world during the last three decades and the continuing fast expansion of the South's manufacturing exports to the advanced countries has raised the question whether these have, or will in the future, lead to "deindustrialization" in the North. This paper provides a consistent conceptual framework for analyzing this issue, which is then applied to the experience of the U.K. economy. It is concluded that, in the 1970s, U.K. manufacturing trade with the South lead to an increase, rather than a decline, in output and employment. However, the paper also provides evidence that in the future this trade is likely to become a source of disequilibrium and may contribute to deindustrialization. Copyright 1989 by Oxford University Press.