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

Naudé, Wim and Szirmai, Adam (2012). The importance of manufacturing in economic development: Past, present and future perspectives. UNU-MERIT.

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  • Author Naudé, Wim
    Szirmai, Adam
    Title The importance of manufacturing in economic development: Past, present and future perspectives
    Publication Date 2012
    Publisher UNU-MERIT
    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.
    Keyword Manufacturing
    Industrialization
    Growth
    Development
    Structural change
    Industrial policy
    JEL L60
    O25
    O40
    Copyright Holder UNU-MERIT
    Copyright Year 2012
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    Created: Wed, 11 Dec 2013, 17:06:05 JST