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Premature Deindustrialisation: The International Evidence

Author

Listed:
  • Emre Özçelik

    (Economics Program, Middle East Technical University, Northern Cyprus Campus, Northern Cyprus)

  • Erdal Özmen

    (Department of Economics, Middle East Technical University, Ankara, Turkey)

Abstract

We investigate patterns and globalisation-related causes of premature deindustrialisation (PD) using a large panel of advanced (AE), emerging (EME) and developing (DE) economies. We find that, PD tends to be the case for all EME and DE, except E. Asian countries. African countries appear to be hit worst by PD. Globalisation-related determinants of PD vary across country groups. Higher trade openness leads to deindustrialisation in DE. Trade openness, however, enhances dependent industrialisation in Latin American countries and the ‘factory economies’ of E. Asia, which have stronger linkages to global value chains. It is our contention that development possibilities can be expanded by aiming at higher technology activities and more intense forward-linkages to global value chains. Our findings suggest that such strategic industrial policies at the levels of EME and DE have the potential to generate growth convergence at international level. It is our contention that development possibilities can be expanded by aiming at more intense linkages to global value chains, but proactive industrial policies at the levels of EME and DE are required to achieve such expansion.

Suggested Citation

  • Emre Özçelik & Erdal Özmen, 2020. "Premature Deindustrialisation: The International Evidence," ERC Working Papers 2001, ERC - Economic Research Center, Middle East Technical University, revised Sep 2020.
    • Handle: RePEc:met:wpaper:2001
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    More about this item

    Keywords

    Developing Economies; Emerging Market Economies; Global Value Chains; Growth; Industrial Policy; Premature Deindustrialisation;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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