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Growth and Divergence in Manufacturing Performance in South and East Asia

  • Timmer, Marcel P.
  • Szirmai, Adam

    (Groningen University)

The growth experience in manufacturing in South and East Asian economies is well documented. Less is known about absolute levels of economic performance. This paper presents a star comparison of six Asian economies (China, India, Indonesia, Japan, South Korea and Taiwan) and the USA, the world productivity leader in manufacturing. The comparison of manufacturing performance is based on an industry of origin approach. Korea and Taiwan experienced catch up compared to the USA, especially since 1985. In 1993, labour productivity in manufacturing in these countries had increased to 49% of the US level in the case of Korea, and to 28% in the case of Taiwan. On the other hand, relative productivity levels in Indonesia, India and China stagnated throughout the 1980s, and are only recently showing weak signs of convergence. Comparative levels of labour productivity were 12% in Indonesia (in 1993), 9% in India (in 1990) and 6% in China (in 1992). Adjusting for small scale establishments brings down the levels in the latter group even further. A breakdown of manufacturing performance by fourteen branches of manufacturing, revealed the same patterns in each countries as at the aggregate level of manufacturing. This indicates that the factors making for catch-up or relative stagnation operate at the level of the total economy, rather than within specific branches. This finding is consistent with theories of conditional convergence. Structural change within manufacturing contributed little or even negatively to the growth in labour productivity. There is no evidence of a systematic pattern of structural change from early industries characterised by low productivity levels, to late industries characterised by high productivity. Manufacturing structures of both catch-up and non-catch economies tend to converge to each other. Comparisons of levels and trends of capital intensity and total factor productivity show a similar distinction between catch-up and non-catch-up economies. In Korea and Taiwan, labour productivity catch up is due to catch up in capital intensity, rather than catch up in total factor productivity. Capital intensity in Korea is 65% of the USA (in 1986) and almost 50% in Taiwan (in 1991), while relative total factor productivity levels are still below 30% of the US level in both economies. Capital intensities in China, India and Indonesia are still below 30% of the USA, with relative total factor productivities not exceeding the 25% level.

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File URL: http://irs.ub.rug.nl/ppn/317330438
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Paper provided by Groningen Growth and Development Centre, University of Groningen in its series GGDC Research Memorandum with number 199737.

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Date of creation: 1997
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Handle: RePEc:dgr:rugggd:199737
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