De-industrialization in West Germany

This paper provides a theoretical framework and some empirical information on the shift from industrialization to de-industrialization which typically occurs in the course of economic growth. It is suggested that such a non-monotonic structural change is caused by a diminishing productivity bias and a constant demand bias between the industrial sector and other sectors of the economy. This pattern could be covered by short-term reversals of relative price trends resulting from external shocks. Hence, the recent gains of the industrial sector in West Germany are interpreted as a temporary deviation from the long-term trend of de-industrialization.