GEHU Urban System Growth - Cause and Consequence of Deindustrilisation

Raw Materials - Manufacturing requires raw materials. In many HICs these have declined in availability and quality. The costs of extraction have also increased due to more challenging environments and labour costs. Transport of heavy raw materials over long distances is also expensive. At the same time higher quality and lower costs in developing countries and emerging economies have made primary industries in HICs less competitive.

Economic Restructuring - Some HICs have restructured their economies through macroeconomic policy. These countries have shifted away from manufacturing towards low-pay tertiary sectors as well as highly skilled quaternary sector jobs. For example, Margaret Thatcher led restructuring in the UK economy and Ronald Reagan did the same in the USA.

The Global Shift - Neo-liberal policies adopted by Western economies but pioneered by the USA and the UK have opened up global markets by incentivising countries to reduce state support and protection in developing and emerging economies. This allowed for transnational corporations (TNCs) to offshore and increasingly outsource production and manufacturing abroad, where low-cost labour and reduced government regulation make manufacturing much cheaper.

Decentralized Industry - Modern-day companies tend to be footloose and not bound by location factors. They also tend to produce lighter products that are more flexibly transported. As a result, these industries choose to locate close to road networks in the periphery of cities rather than in the inner city.

Cycle of Decline - The closure of large employers in HIC cities creates a negative cycle within inner city districts. High unemployment leads to reduced spending and government budgets to invest in inner city areas. Out-migration and high concentration of low-income groups means businesses close leading to further loss of jobs.

Urban Decline and Physical Decay

As factories close and businesses related to manufacturing shut down, industrial areas and surrounding neighborhoods fall into disrepair. Buildings may be left abandoned, leading to urban blight and a visible decline in infrastructure, which can make cities less attractive for new investments.

Rising Unemployment and Social Inequality

Job losses in manufacturing can lead to high unemployment rates, especially among low-skilled workers who struggle to transition to service-sector jobs. This often leads to income inequality and creates a widening socioeconomic divide in urban areas, with wealthier neighborhoods often existing alongside deprived, job-scarce areas.

Population Decline and Outmigration

As job opportunities shrink, people may migrate to other regions or cities in search of employment. This leads to population decline in affected urban areas, reducing the tax base, which can further limit local governments' ability to maintain infrastructure and services.

Increase in Crime and Social Problems

High unemployment and poverty can lead to social issues, including crime, drug abuse, and homelessness. In areas where deindustrialization has led to economic decline, there may be a higher incidence of these problems, which puts a strain on social services and impacts the quality of life for residents.

Attempts at Urban Regeneration and Gentrification

In response to economic decline, many cities pursue regeneration projects to attract new industries, often focusing on the service and technology sectors. This can lead to gentrification, where wealthier residents move into redeveloped areas, increasing property values and sometimes displacing long-time, lower-income residents.

Environmental Policies and Sustainability Concerns

Strict environmental regulations in developed countries make manufacturing expensive due to high compliance costs, prompting companies to relocate to countries with less stringent regulations.