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Manufacturing and Economic Growth in Developing Countries, 1950-2005

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  • Szirmai, Adam

    ()
    (UNU-MERIT/MGSoG, Maastricht University)

  • Verspagen, Bart

    ()
    (UNU-MERIT, and School of Business and Economics, Maastricht University)

Abstract

Since the middle of the eighteenth century, manufacturing has functioned as the main engine of economic growth and development. However, in recent research, questions have been raised concerning the continued importance of the manufacturing sector for economic development. This paper reexamines the role of manufacturing as a driver of growth in developing countries in the period 1950-2005. The paper makes use of a newly constructed panel dataset of annual value added shares (in current prices) for manufacturing, industry, agriculture and services for the period 1950-2005. Regression analysis is used to analyse the relationships between sectoral shares and per capita GDP growth for different time periods and different groups of countries. For the total sample, we find a moderate positive impact of manufacturing on growth in line with the engine of growth hypothesis. Splitting our sample into three subperiods, we only find a direct effect of manufacturing on growth for the middle period 1970-1990. We also find interesting interaction effects of manufacturing with education and income gaps. In a comparison of the subperiods, it seems that since 1990, manufacturing is becoming a more difficult route to growth than before.

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Bibliographic Info

Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 069.

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Date of creation: 2011
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Handle: RePEc:unm:unumer:2011069

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Related research

Keywords: Structural Change; Manufacturing; Engine of Growth; Catch-up;

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References

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  1. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
  2. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
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  4. Fagerberg, Jan & Verspagen, Bart, 2002. "Technology-gaps, innovation-diffusion and transformation: an evolutionary interpretation," Research Policy, Elsevier, vol. 31(8-9), pages 1291-1304, December.
  5. Fagerberg, Jan, 1994. "Technology and International Differences in Growth Rates," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1147-75, September.
  6. Szirmai, Adam, 2008. "Explaining Success and Failure in Development," MERIT Working Papers 013, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  7. Chakravarty, Sangeeta & Mitra, Arup, 2009. "Is industry still the engine of growth? An econometric study of the organized sector employment in India," Journal of Policy Modeling, Elsevier, vol. 31(1), pages 22-35.
  8. Jan Fagerberg & Bart Verspagen, 2007. "Innovation, growth and economic development: have the conditions for catch-up changed?," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 1(1), pages 13-33.
  9. Marcel P. Timmer & Gaaitzen J. de Vries, 2009. "Structural change and growth accelerations in Asia and Latin America: a new sectoral data set," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 3(2), pages 165-190, June.
  10. Rodrik, Dani, 2009. "Growth After the Crisis," CEPR Discussion Papers 7480, C.E.P.R. Discussion Papers.
  11. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2005. "Productivity, Volume 3: Information Technology and the American Growth Resurgence," MIT Press Books, The MIT Press, edition 1, volume 3, number 0262101114, January.
  12. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
  13. Baltagi, Badi H. & Bresson, Georges & Pirotte, Alain, 2003. "Fixed effects, random effects or Hausman-Taylor?: A pretest estimator," Economics Letters, Elsevier, vol. 79(3), pages 361-369, June.
  14. Szirmai, Adam, 2009. "Industrialisation as an engine of growth in developing countries," MERIT Working Papers 010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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Citations

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Cited by:
  1. Zoran Aranđelović & Marija Petrović-Ranđelović & Vladislav Marjanović, 2013. "Structural Changes In The Light Of New Industrial Strategy," Serbian Association of Economists Journal, SAE - Serbian Association of Economists, issue 5-6, pages 373-385, August.
  2. Szirmai, Adam, 2012. "Proximate, intermediate and ultimate causality: Theories and experiences of growth and development," MERIT Working Papers 032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  3. Mitra, Arup, 2013. "Can industry be the key to pro-poor growth? : An exploratory analysis for India," ILO Working Papers 484346, International Labour Organization.
  4. Lavopa, Alejandro & Szirmai, Adam, 2012. "Industrialization, employment and poverty," MERIT Working Papers 081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  5. Lavopa, Alejandro & Szirmai, Adam, 2012. "Industrialization, employment and poverty," MERIT Working Papers 081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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