" (Rowthorn and Ramaswamy, 1999)
The largest portion of the workforce in these advanced economies is employed either in the manufacturing or services sector and the result is "...the evolution of employment shares depends mainly on output and productivity trends in these two sectors." (Rowthorn and Ramaswamy, 1999) in the majority of advanced economies, there has been a generally faster growth of labor productivity than the growth in services with the output growth about the same in these two sectors. Therefore, due to the output trends being so similar in the two sectors, the productivity lagging in the services sectors has a result, which is the absorption of a rising share of total employment "while rapid productivity in growth in manufacturing leads to a shrinking employment share for this sector." (Rowthorn and Ramaswamy, 1999)
The work of Sachs and Schatz (1994) as well as Wood (1994, 1995) and Saeger (1996) all agrees that importance should be "assigned to 'internal' factors in accounting for deindustrialization." (Rowthorn and Ramaswamy, 1999) it is however recognized in the work of all these individuals that "external factors such as the growth of north-south trade will, under these conditions reduce manufacturing employment in the north because of the number of low-skill jobs lost in the import-competing industries will greatly exceed the new jobs created in the skill-intensive export sector." (Rowthorn and Ramaswamy, 1999)
Rowthorn and Ramaswamy (1999) state that among richer countries "gross imports from the south have eliminated manufacturing jobs equivalent in a number to 1.5-4% of total employment. Indications are "for the new manufacturing jobs created by exports to the south are 0.3% for the United States and 0.3% for the average country. Given that total employment in the countries of our sample is about 350 million, this suggests that about 7 million manufacturing jobs have been lost because of southern competition and about 1 million created by additional exports to the south. The net loss of 6 million jobs is less than one-fifth of manufacturing jobs lost because of deindustrialization since, 1970, but the impact on unskilled workers and those with nontransferable skills is greater than this figure suggests." (1999)
While deindustrialization is not only due to north-south trade, this trade has affected the demand for some types of labor. Rowthorn and Ramaswamy state that there are two primary channels that competition from low-wage producers can utilize and that affects employment in manufacturing in northern countries:
1) Via its impact on total manufacturing output in the north;
2) Through its impact on labor productivity. (1999)
Labor has responded in northern countries "not by abandoning manufacturing as Brown and Julius (1994) have claimed but by increasing labor productivity within the manufacturing sector." (Rowthorn and Ramaswamy, 1999) This is stated to have involved:
1) Increasing efficiency to produce more of the same kind of output per unit of labor; or 2) Switching to other types of manufactured goods where value-added per worker is higher....
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