An inquiry into changing industrial labour force patterns: Developed and developing countries

Structural transformation patterns are examined to search for a systematic breakdown in the historical relationship between rising GDP and rising industrial labour force shares. Some older industrialised countries have considered focusing on knowledge and skill intensive activity as a new \u27engine of growth\u27 in response to industrial employment decline, and stagnating incomes. Such new economic activity anticipates trade with industrialising countries, whose incomes would rise with industrialisation. This relationship is dependent on the persistence of labour-intensive specialisation in industrialising countries. Three trends might prevent prolonged specialisation: increased international competitiveness, rising capital-intensity in production, and international economic specialisation. Each of these is hypothesised to reduce new industrial labour force sizes and pay, thus reducing demand, and the multiplier effects of industrial activity. An examination of international industrial labour force levels, industrial GDP share, and GDP per capita over time indicates that industrial labour forces are smaller over time, and receive proportionally less of the income produced by this sector. Instead, labour in industrialising countries enters the service sector, whose GDP share is declining. A specific comparison of older industrial countries with newer post-industrial (deindustrialising) countries indicates that the industrial experience of the older industrial countries may have been unique, and that the role of industry in national and personal income growth is changing