Manufacturing and Economic Growth in Developing Countries, 1950-2005

Szirmai, Adam and Verspagen, Bart (2011). Manufacturing and Economic Growth in Developing Countries, 1950-2005. UNU-MERIT.

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  • Author Szirmai, Adam
    Verspagen, Bart
    Title Manufacturing and Economic Growth in Developing Countries, 1950-2005
    Publication Date 2011
    Publisher UNU-MERIT
    Abstract 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.
    Keyword Structural change
    Manufacturing
    Engine of growth
    Catch-up
    Copyright Holder UNU-MERIT
    Copyright Year 2011
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    Created: Wed, 11 Dec 2013, 17:00:28 JST