Abstract
Reindustrialization is gaining focus in developed countries and manufacturing is again becoming a priority in the economic policy documents of the European Union (EU). We investigate whether there is reindustrialization happening in the EU, and if so, whether the evolution of manufacturing is similar among the different member states. For this analysis, we selected two country groups, ten post-socialist member states (PS10) and the core fifteen members (EU15). We use a decomposition method to separate the effects of changing labor productivity in manufacturing, changing share of manufacturing in gross value added and changing aggregate labor productivity on the change in manufacturing’s share in employment between 2000 and 2017. We find deindustrialization in the EU15 group: a decrease in manufacturing employment share as well as manufacturing employment itself along with a stagnant share in total gross value added. Meanwhile the Post-socialist country group shows signs of reindustrialization: the share of manufacturing employment slightly increased along with an increasing employment, and a dynamically increasing gross value added share. We also find that after the global financial crisis the evolution of the manufacturing sector in the Post-socialist group is more similar to that in the EU15 group than it was before the crisis.