Does Premature Deindustrialization Matter? The Role of Manufacturing Versus Services in Development

28 Pages Posted: 21 Sep 2018 Last revised: 22 Sep 2018

Date Written: September 20, 2018

Abstract

The shares of manufacturing in value added and employment across a range of developing economies peaked at lower levels of per capita income compared with their high-income, early-industrializer precursors. Based on the statistical analysis of input-output tables and firm-level data, the paper contributes to the discussion on whether this "premature deindustrialization" matters by showing that: a) the premature declining share of the manufacturing sector is largely not driven by a statistical artifice whereby what was earlier subsumed in manufacturing value added is now accounted for as service sector contributions; b) Some features of manufacturing that were thought of as uniquely special for development, such as scale economies, exports, and innovation, are increasingly shared by services sector firms. Yet, a given service subsector is unlikely to provide opportunities for productivity growth and job creation for unskilled labor simultaneously; c) Some high-productivity services serve final demand or derive demand from several sectors, while others are more closely linked to a manufacturing base.

Keywords: Textiles, Apparel & Leather Industry, Business Cycles and Stabilization Policies, General Manufacturing, Construction Industry, Common Carriers Industry, Food & Beverage Industry, Plastics & Rubber Industry, Pulp & Paper Industry, International Trade and Trade Rules, Transport Services, Public Sector Administrative and Civil Service Reform, Public Sector Administrative & Civil Service Reform, Economics and Finance of Public Institution Development, De Facto Governments, Democratic Government, Trade and Services

Suggested Citation

Nayyar, Gaurav and Vargas Da Cruz, Marcio Jose and Zhu, Linghui, Does Premature Deindustrialization Matter? The Role of Manufacturing Versus Services in Development (September 20, 2018). World Bank Policy Research Working Paper No. 8596, Available at SSRN: https://ssrn.com/abstract=3252828

Gaurav Nayyar (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Marcio Jose Vargas Da Cruz

World Bank Group

1818 H St NW
Washington, DC 20433
United States

Linghui Zhu

World Bank Group

1818 H St NW
Washington, DC 20433
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
183
Abstract Views
677
Rank
309,515
PlumX Metrics