Premature deindustrialization: an empirical analysis in latecomer developing countries

This study examines whether latecomer developing countries worldwide have experienced premature deindustrialization. The main findings of this study are as follows. First, the fixed effect model based on panel data, as a baseline analysis for examining the manufacturing-income nexus using the latecomer index, identified the existence of premature deindustrialization in latecomer developing economies under globalization in the post-1990 period. Second, from a geographical perspective, the acceleration of premature deindustrialization was confirmed in Latin America and some areas of Africa. Third, the quantile regression, which served for checking the robustness of the fixed effect model estimation results, also supported the existence of premature deindustrialization in latecomer developing economies. Finally, alternative estimations demonstrated that partaking in global value chains (GVC) facilitated industrialization, whereas natural resource abundance prevented it. Regarding policy implications, GVC participation can be a viable policy for mitigating premature deindustrialization in latecomer developing economies; for resource-rich economies to prevent the Dutch disease effect from accelerating premature deindustrialization, their resource revenues could be mobilized to productive uses, like infrastructure development.