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Manufacturing matters…but it’s the jobs that count

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  • Jesus Felipe
  • Aashish Mehta
  • Changyong Rhee

Abstract

We assemble a large database of countries’ manufacturing employment and output shares for 1970–2010. We ask whether increased global competition and labor-displacing technological change have made it more difficult for countries to industrialize in employment, and whether there are alternative routes to prosperity. We find that: (1) All of today’s rich non-oil economies enjoyed at least 18% manufacturing employment shares in the past; (2) They often did so before becoming rich; (3) Manufacturing peaks at lower employment shares today (typically below 18%), than in the past (often over 30%); (4) Compared with employment, output shares are weak predictors of prosperity, and are under less pressure; and (5) Late developers’ manufacturing employment shares peak at much lower per capita incomes than previous studies have shown. We demonstrate that final result through analysis and simulation of the dynamics implied by our regression model. Becoming rich through industrialization has therefore become much more difficult. We argue that this is in large part because of rapid growth in the manufacturing capabilities of some very populous countries.

Suggested Citation

  • Jesus Felipe & Aashish Mehta & Changyong Rhee, 2019. "Manufacturing matters…but it’s the jobs that count," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(1), pages 139-168.
    • Handle: RePEc:oup:cambje:v:43:y:2019:i:1:p:139-168.
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    File URL: http://hdl.handle.net/10.1093/cje/bex086
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    Citations

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    Cited by:

    1. Joao Paulo A. de Souza & Leopoldo Gómez‐Ramírez, 2021. "Industrialization and skill acquisition in an evolutionary model of coordination failures," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 849-867, November.
    2. Boire, Sidiki & Nell, Kevin S., 2021. "The enclave hypothesis and Dutch disease effect: A critical appraisal of Mali's gold mining industry," Resources Policy, Elsevier, vol. 74(C).
    3. R, Rekha & M, Suresh Babu, 2022. "Premature deindustrialisation and growth slowdowns in middle-income countries," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 377-389.
    4. Patieene Alves Passoni, 2022. "Prezzi relativi e deflazione delle tabelle input-output: implicazioni per l'analisi strutturale (Relative prices and deflation of relative prices and deflation of input-output tables: Implications for," Moneta e Credito, Economia civile, vol. 75(299), pages 307-325.
    5. Liboreiro, Pablo R. & Fernández, Rafael & García, Clara, 2021. "The drivers of deindustrialization in advanced economies: A hierarchical structural decomposition analysis," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 138-152.
    6. Cassini, Lorenzo, 2023. "Path-dependent productive specialization: Should prematurely deindustrialized countries shift to a KIBS export-led strategy?," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 199-209.

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