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Manufacturing and Economic Growth in Developing Countries, 1950-2005

  • Szirmai, Adam

    ()

    (UNU-MERIT/MGSoG, Maastricht University)

  • Verspagen, Bart

    ()

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

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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File URL: http://www.merit.unu.edu/publications/wppdf/2011/wp2011-069.pdf
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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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  1. 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).
  2. Jan Fagerberg & Bart Verspagen, 2001. "Technology-Gaps, Innovation-Diffusion And Transformation: An Evolutionary Interpretation," Working Papers 11, Centre for Technology, Innovation and Culture, University of Oslo.
  3. Rodrik, Dani, 2009. "Growth After the Crisis," CEPR Discussion Papers 7480, C.E.P.R. Discussion Papers.
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  8. Robert J. Barro & Jong-Wha Lee, 2010. "A New Data Set of Educational Attainment in the World, 1950-2010," NBER Working Papers 15902, National Bureau of Economic Research, Inc.
  9. Fiona Tregenna, 2009. "Characterising deindustrialisation: An analysis of changes in manufacturing employment and output internationally," Cambridge Journal of Economics, Oxford University Press, vol. 33(3), pages 433-466, May.
  10. Tregenna, Fiona, 2011. "Manufacturing Productivity, Deindustrialization, and Reindustrialization," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  11. 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.
  12. 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.
  13. 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, August.
  14. 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.
  15. 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.
  16. 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.
  17. 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).
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