CYCLICAL FACTORS, TECHNOLOGICAL CHANGE, CAPITAL MOBILITY, AND DEINDUSTRIALIZATION IN METROPOLITAN TORONTO

Abstract

Major layoffs at manufacturing plants in Toronto between 1981 and 1984 are attributed to one of three primary causes: cyclical factors, technological change, and industrial restructuring. Our investigations show that one-half of the plant closures were due to cyclical factors, and that this subset included a number of innovative firms that became overcapitalized just as interest rates soared. Only 8 of 61 closures were due primarily to technological change. The remaining one-third of the plants, including a number of profitable operations, closed because of industrial restructuring. Industrial policies proposed by the City and Metropolitan Councils of Toronto have not slowed deindustrialization because they fail to address the fundamental causes of the problem. It is argued that proactive policies focusing on employment, rather than on industry, present a more promising approach to combatting deindustrialization.