ABSTRACT
A persistent crisis of the steel industry in Western Europe and the United States as well as continuing efforts by developing countries to establish their own steel industries have been the major features of the international steel scene during the last 15 years. The changing regional pattern of world steel production was strongly influenced by changing demand conditions. Increased competition from alternative materials has affected the steel industry all over the world. In the industrialized countries steel demand was further dampened by low rates of overall economic growth and a growing proportion of services in gross output. In fact, there has been an absolute decline of steel consumption in industrialized countries since the mid-1970s while steel consumption has increased markedly in developing countries due to rapid economic growth. However, a stagnation or reduction of domestic demand does not necessarily imply a worsening of supply conditions. Apart from unfavourable (domestic) demand conditions the steel crises in the industrialized countries must, therefore, also result from unfavourable or deteriorating supply conditions. Worsening supply conditions have been explained early on by a shift of comparative advantage from industrialized to developing countries [Wolter, 1974]. It has been argued that a broader industrial base and a growing maturity of the labour force have provided some NICs with a comparative advantage in steel production.
