United Kingdom has been the most forerunning industrialized country in the world since the first Industrial Revolution after James Watts had invented the steam engine in 1795. The country thus dominated the largest share of exporting goods market in the world for decades in the late 18th century.

Since the interim years between two world wars, however, when the second Industrial Revolution began to take place, it started to delay relatively behind the competing countries such as the United States, West Germany and Japan in improving its competitiveness in the production industries. The proportion of employment in the production industries began to decrease from early 20 century, and this phenomena was named as the De-industrialization later.

There have been large numbers of surveys and research work not only from inside  but also from outside of U.K.  to find out  the causes of this de-industrialization. Amongst them, one of the most outstanding was Rowthorn and Wells (1987), which have clearly defined the concept of the de-industrialization as the declining employment in the production industries, and stipulated the theory of the de-industrialization in which he maintained `the specialization thesis' as the most relevant.

This study, thus accepting their theory of `the specialization thesis' which persuasively articulated the possibility that the manufacturing share of the employment would have fallen even further if U.K.'s industrial performance had been more successful, and tried to explained the causes of the de-industrialization as they are closely related with unique characteristics of `the English system' or 'Anglo-American System' of corporate governance in the industrial organization.

This unique system had exercised  strong influences on the U.K.'s system of industrial organization which made possible both extreme specialization of U. K. industries to manufacturing sectors and the earliest de-industrialization of U. K. economy among other industrialized countries.

And furthermore, this study argued that the origin of the British system of corporative governance stemmed out of the Gentlemanly Capitalism by the Crafts' concept. This study attributed  the reason of the earliest  de-industrialization of U. K.'s economy among all other industrial countries to its own unique system of  the corporate governance.

The de-industrialization of U.K. economy can never be said to be a disaster but a comfort, and  this study claimed that, if Korea wants to maintain its economic growth in the next millennium,  it should try to import the British system of corporate governance. Even though the system may accelerate the de-industrialization, it can contribute for  the growth and development of the Korean economy by stimulating the service industries to lead the economy. 

In historical retrospects, we find that the de-industrialization triggered off only after that the maturation of the production industries had been attained. If we introduce U. K.'s system of corporate governance, it will accelerate the de-industrialization before  reaching the matured stage of the production industry. However, it will help to trigger restructuring the economy and intensifying the productivity. The service industries is to lead  the economic growth after the de-industrialization in every matured economy.

Admitting that the system is not very good for rapid development of manufacturing s industries,  it is clear that the de-industrialization should be paralleled with the effort to develop the production industries as well as the primary industries, especially when the service industries did not show trade surplus within the sector.

Manufacturing industries require longer-term insight, longer-term investment planning and ever-increasing efforts for product innovation. It is difficult for managements to maintain the consents of shareholders and to assure these risk-bearing supports from the owners and shareholders, because this longer-term bears more risks. It is more liable to be split  opinions between the managements and shareholders in manufacturing industries under the English system of corporate governance than in service industries. The manufacturing industries, however, is regarded to be difficult to maintain its competitiveness in the new circumstances of the world economy in the next decades not only in U.K. but also in Korea.

De-industrialization will be able to accompany with the development of service industries if the service industries have potentiality to gain the comparative advantages. If it is not so, then the de-industrialization will result in a slow down of economic growth rate, which is explained as 'failure thesis' by Rowthorn-Wells.

Even if Korea could develop a long-term comparative advantage in human-resource intensive service industries, it must try to equilibrate trades within the production industries as well as the primary industries until the human-resource intensive service industries will gain the competitiveness and substitute the production industries. Furthermore, it is likely that only way to cope with the difficulties that Korea has confronted with after the IMF bailing-out system.  If Korea had introduced the Anglo-American system of corporate governance, it should have never run into the financial crisis in 1997.

Since the more productive and competitive the manufacturing sectors become, the more rapidly the de-industrialization will take place, and countries which had not long tradition of service industries as well as the background of advanced  civilization,  should develop these comparative advantages in the service industries as the leading industries in the next decades. Therefore, it will be proper to try to relocate most of the resources not only into the production industries but also services industries as well as primary industries to improve the comparative advantage within the industrial sectors rather than between the industrial sectors in Korea.

The U. K. system of corporate governance is good for the risk averting management and ensure the transparency in accountings. It can avoid bankruptcy through merge and acquisition which enable all the result of corporate management revert to the industries but not to the government nor to the society. The body of directors can prevent from risky investment and reckless expansion of production capacities. It also prevent the agents of board from corruption and moral hazard.  It is well known fact that the financial crises of Korea and other Asian countries are closely related with the corporate governance system of Korea.

In this respects, we can say that U.K. system of corporate governance is better in the terms of the fare and transparent management, and minimize the evil influence from the arbitrary managements through strict control by the  board of management.

So that, it is recommendable for Korea to  introduce the U.K. system of corporate governance as the principle of industrial policy, even if it is found not to be efficient for manufacturing industries but accelerate de-industrialization. Korean financial crises shall  be overcome rapidly if the U.K. system of corporate governance is  introduced, and it seem to be best solution to cope with the difficulties  from the IMF managed economy in the next decade.

Since it is foreseen that the most of industrialized countries have to  follow the U. K.'s experience of de-industrialization sooner or later, and since Korea also stepped once into the de-industralization process from 1988, it will be impossible to revert this longer-term trend. If this is the fact, then we must make great efforts both to improve the competitiveness in the service industries in order to evade  deterioration of external balance from the other sectors of industries in Korea.

This study also emphasized that the development of primary industries must be taken place paralleled with that of service industries, since the employment in the former sector still preserves the 11% of inefficient work force compared to 2% in U.K.  and 6% in Japan, and the employment in the production industry reached to 24% of total employment which is almost equivalent with Japan respectively in 1997.  The development of service industries must be carried out by way of absorbing man power from the agricultural sector which requires increment of investment to improve the productivity in the primary sector.  If it does not do so, the import demand in the agricultural sectors will give heavier burden to the industrial sector in order to compensate the deficit from the agricultural imports, which eventually act as the limitation of growth from the balance-of-payment constraint.

Since the cause of de-industrialization in Korea is more closely correlated with the import increase and export decline than the economic growth rate, this study prospected that the de-industrialization in Korea can be explained by the `failure thesis'. There are strong possibility that the import will increase and  the productivities in both manufacturing and primary sectors do not improve rapidly. The de-industrialization will accompany stagnant economic growth and deterioration of current accounts, if the primary sector could not improve the productivity.  The de-industrialization, then, in Korea will be taken place in a prolonged period for the accomplishment.

It argued as the conclusion of the study that Korea will be able to attain the highly knowledge-intensive industrial society after all.  But it must be possible only through the dual-sided efforts to improve both of industry-oriented technologies and level up the human resources suitable for service industries.  Korea must seek simultaneous dual strategies both of improving  the diversified knowledge-based technology-intensive industries and of improving the quality of human resources which will serve for service-oriented technology-intensive service industries.