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The importance of manufacturing in economic development: Past, present and future perspectives

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  • Naudé, Wim

    ()
    (UNU-MERIT / MGSOG, Maastricht University, and Maastricht School of Management)

  • Szirmai, Adam

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

Abstract

The structural transformation of a traditional economy dominated by primary activities into a modern economy where high-productivity activities in manufacturing assume an important role remains a defining feature of economic development. The challenges to attain such structural transformation may be more daunting than in the past. Based on a recent UNU-WIDER/UNU-MERIT project on industrialization this paper discusses the past and present roles of the manufacturing sector in structural change and analyses new challenges facing industrial policy. New challenges discussed in the paper include: (i) integration into global value chains, (ii) the shrinking of policy space in the present international order, (iii) the rise of the Asian driver economies, (iv) new opportunities provided by resource-based industrialization, (v) the accelerating pace of technological change in manufacturing, (vi) how to deal with jobless growth in manufacturing, (vii) creating adequate systems of financial intermediation, and (viii) how to respond to the threats of global warming and climate change. We argue that structural transformation of developing countries requires a type of manufacturing sector development that can deliver high-quality employment, that is aligned with the international division of labour, and that would not lead to autarky, or a reversal of global gains in establishing openness in trade. Industrial policy can make valuable contributions in this regard if the lessons of the past and the challenges of the future are sufficiently taken into consideration.

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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 041.

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Date of creation: 2012
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Handle: RePEc:unm:unumer:2012041

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Related research

Keywords: manufacturing; industrialization; growth; development; structural change; industrial policy;

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References

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  1. Robert Feenstra, 2003. "Integration Of Trade And Disintegration Of Production In The Global Economy," Working Papers 986, University of California, Davis, Department of Economics.
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  8. Ioannis Bournakis & Michela Vecchi & Francesco Venturini, 2011. "Offshoring and Specialisation: Are Industries Moving Abroad?," Quaderni del Dipartimento di Economia, Finanza e Statistica 98/2011, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
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Cited by:
  1. 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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