Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128534
Authors: 
Felipe, Jesus
Mehta, Aashish
Rhee, Changyong
Year of Publication: 
2014
Series/Report no.: 
ADB Economics Working Paper Series 420
Abstract: 
This paper asks, first, whether today's developing economies can achieve high-income status without first building large manufacturing sectors. We find that practically every economy that enjoys a high income today experienced a manufacturing employment share in excess of 18%-20% sometime since the 1970s. Manufacturing output share thresholds are much poorer predictors of rich-country status than their employment counterparts. This motivates us to ask whether it is becoming more difficult to sustain high levels of manufacturing activity. We find that the maximum expected employment share for a typical developing economy has fallen to around 13%-15%, and that deindustrialization in employment sets in at much lower income per capita levels of $8,000-$9,000, than it once did. Neither manufacturing output shares, nor the level of income at which they decline have fallen as obviously. These results are consistent with the idea that industrialization in employment terms has been more important for eventual prosperity than has industrialization in output terms; and that high manufacturing employment shares are becoming more difficult to sustain as incomes rise. This suggests that the path to prosperity through industrialization may have become more difficult.
Subjects: 
industrialization
inverted U-shape
manufacturing
JEL: 
O14
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/3.0/igo/
Document Type: 
Working Paper

Files in This Item:
File
Size
1.19 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.