>Robert Rowthorn has a paper, co-written with Ramana Ramaswamy, in the new
>issue of IMF Staff Papers. Ramaswamy is a staff economist at the IMF. The
>paper argues that deindustrialization is "explained primarily by
>developments that are internal to the advanced economies" - productivity
>growth and shifts in demands away from mfg and towards services.
>"North-south trade explains less than one-fifth of deindustrialization,"
>and has had little effect on manufacturing output in the "advanced"
>economies.
Arguing that trade with the South, not economic maturity, has been the main cause of Northern industrialisation, Adrian Wood suggests that "expansion of trade with the South could have accelerated the decline of mfg's employment share by widening the gap in productivity growth between mfg and services. Moreover, it was argued that trade with the South has indeed raised labour productivity in Northern mfg, both through changes in activity mix (abandoning labour intensive products and stages of production) and through defensive innovation." Wood also suggests that the Rowthorn-Wells model of economic maturity cannot explain the timing of deindustrialisation since as only after 1973 as there a downward shift, confined to high income countries, in their cross country relationship between the industrial employment share and the level of per capita income, it is hard to believe that the decline in the share of mfg employment was simply the result of longstanding trends in sectoral productivity growth or in the composition of demand."
Wood's critique of Rowthorn is in North South Trade, Employment and Inequality, p. 199-205
"Didn't Rowthorn used to be a Marxist? Is he still?
In Rowthorn's 1970s book Capitalism, Conflict and Inflation included a still widely cited and quite accessible Marxist critique of the neo Ricardians. More recently however he has written a critique of the falling rate of profit theory.
He looks at the capital output ratio in mfg industry for two periods 1960-3 and 1970-3; both capital stock and output are then measured in current prices. He notes that that capital output ratio rose substantially in most countries in these time periods. But he argues that this was not so much the result of declining physical productivity of capital but the rising price of capital inputs as compared to final output. He argues that capital goods became more expensive in comparison with final output probably because there was slower technical progress in the sectors producing capital goods, as compared to the sectors which use them: unven sectoral productivity was a more important factor than declining capital productivity in explaining what happened to the capital coefficient in the mfg sector. He suggests the existence of organisation and institutional barriers to the adoption of more highly mechanized techniques of production. He also argues that a major depression need not be preceded by a rise in the capital coefficient. It seems that his causal theory of uneven development to explain the rise in said ratio can be compared to Brenner's theory of intl competition as the effective cause of a reduction in the nominal output capital ratio.
Yours, Rakesh