Explaining Deindustrialization: Globalization, Failure, Or Success?

Abstract

Although sociologists have expressed growing interest in globalization, they have devoted little sustained empirical attention to the many claims made in its name. I focus on the link that has been drawn between globalization and the deindustrialization of the advanced industrial societies. To examine this, I employ a pooled time-series of cross-sections data set that combines observations on 18 OECD nations across the 1968–1992 period. Fixed-effects regression models that control for unmeasured country-specific effects reveal support for arguments that implicate foreign direct investment and North-South trade in the declining percentage of the labor force employed in manufacturing in the OECD countries. Regression results also show that deindustrialization across this period is largely explained by a model that combines an attention to the post-Golden Age “troubles” of northern manufacturing with classic generalizations of the process of development. Interpretation of the empirical findings is tempered by an exercise in counterfactual history, which reveals that deindustrialization would have been considerable in these countries even if the upswings in direct investment and southern imports had not occurred or if the performance of the manufacturing sector had been stronger.