Post-industrial economy
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A post-industrial economy refers to a period of development within an industrialized economy or nation in which the relative importance of manufacturing lessens and that of services, information, and research grows.
Such economies are often marked by:
- A declining manufacturing sector, resulting in de-industrialization,
- A large service sector,
- An increase in the amount of information technology, often leading to an "information age". Information, knowledge and creativity are the new raw materials of such an economy.
The industry aspect of a post-industrial economy is sent into less developed nations which manufacture what is needed at lower costs (see outsourcing). This occurrence is typical of nations that industrialized in the past such as the United States and most Western European countries.
The problem with a service-based economy is the nations over time experience a long term trade deficit which degrades the economy. A common trait that these economies have are high unemployment and high wages. This is because as more manufacturing jobs move to developing nations, more jobs are lost. The people that lost these jobs tend to feel that they are entitled to the high wage they previously earned and have difficulty finding suitable employment.
One way some nations deal with this economic slow down is to borrow more money and lower interest rates. This artificially fixes the problem by creating false wealth. This also causes the affordable housing to disappear because of lower interest rates more expensive homes become more affordable. After interest rates rise to normal levels it is found that the artificially high property values are incorrect. This is what is referred to as a real estate bubble
