Manufacturing Matters…But It's the Jobs That Count

41 Pages Posted: 3 Feb 2015 Last revised: 27 Nov 2017

Jesus Felipe

Asian Development Bank

Aashish Mehta

University of California, Santa Barbara

Changyong Rhee

International Monetary Fund

Date Written: January 1, 2017

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 nonoil economies enjoyed at least 18% manufacturing employment shares in the past, and often did so before becoming rich; (2) Manufacturing employment peaks at lower incomes and shares today (typically below 18%), than in the past (often over 30%); (3) Although manufacturing labor productivity grew faster than non-manufacturing labor productivity within countries, they grew at similar rates globally, because factory jobs moved to less productive countries; and (4) Manufacturing’s global employment share has not declined during the last 40 years. Industrialization has become more difficult, not because the sector has eliminated labor globally, but because of heightened international competition.

Keywords: deindustrialization; industrialization; manufacturing; manufacturing labor productivity; structural transformation; globalization.

JEL Classification: O14

Suggested Citation

Felipe, Jesus and Mehta, Aashish and Rhee, Changyong, Manufacturing Matters…But It's the Jobs That Count (January 1, 2017). This paper extends a title by the same name, released in November 2014 as Asian Development Bank Economics Working Paper Series No. 420. Available at SSRN: https://ssrn.com/abstract=2558904 or http://dx.doi.org/10.2139/ssrn.2558904

Jesus Felipe (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Aashish Sunil Mehta

University of California, Santa Barbara ( email )

Santa Barbara, CA 93106
United States

HOME PAGE: http://www.global.ucsb.edu/people/aashish-mehta

Changyong Rhee

International Monetary Fund ( email )

700 19th Street NW
Washington, DC 20431
United States

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