The importance of manufacturing in economic development: Past, present and future perspectives
AbstractThe 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 InfoPaper 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.
Date of creation: 2012
Date of revision:
manufacturing; industrialization; growth; development; structural change; industrial policy;
Find related papers by JEL classification:
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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