Economic Globalization, Industrialization and Deindustrialization in Affluent Democracies

This study reexamines the relationship between economic globalization and manufacturing employment in affluent democracies. After reviewing past research, including the well-supported Rowthorn model, we propose a differentiation-saturation model that theorizes that globalization has a curvilinear relationship with manufacturing employment. Using two different techniques, we analyze the most comprehensive sample of 18 affluent democracies from 1960-2001. We examine 12 globalization measures and provide the first analysis of the curvilinear relationship between globalization and manufacturing employment. We find that some aspects of globalization have linear effects on manufacturing employment, most of which are positive. We find more evidence, however, that globalization has a curvilinear, inverted U-shaped relationship with manufacturing employment. The evidence for the Rowthorn model is mixed. GDP per capita and its square do not have robust effects, but agricultural employment is one of the most important causes. Including globalization in the model weakens the evidence for the Rowthorn model. There is some evidence that globalization has different effects across different varieties of capitalism, regions and historical periods. Ultimately, our analyses partially support both the Rowthorn model and our differentiation-saturation model.