Unconditional Convergence in Manufacturing
TL;DR: The authors found that manufacturing industries exhibit strong unconditional convergence in labor productivity and showed that despite strong convergence within manufacturing, aggregate convergence fails due to the small share of manufacturing employment in low-income countries and slow pace of industrialization.
Abstract: Unlike economies as a whole, manufacturing industries exhibit strong unconditional convergence in labor productivity. The article documents this at various levels of disaggregation for a large sample covering more than 100 countries over recent decades. The result is highly robust to changes in the sample and specification. The coefficient of unconditional convergence is estimated quite precisely and is large, at between 2–3% in most specifications and 2.9% a year in the baseline specification covering 118 countries. The article also finds substantial sigma convergence at the two-digit level for a smaller sample of countries. Despite strong convergence within manufacturing, aggregate convergence fails due to the small share of manufacturing employment in low-income countries and the slow pace of industrialization. Because of data coverage, these findings should be as viewed as applying to the organized, formal parts of manufacturing.
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01 Mar 2016
TL;DR: A significant deindustrialization trend in recent decades that goes considerably beyond the advanced, post-industrial economies has been documented in this article, and the evidence suggests both globalization and labor-saving technological progress in manufacturing have been behind these developments.
Abstract: I document a significant deindustrialization trend in recent decades that goes considerably beyond the advanced, post-industrial economies. The hump-shaped relationship between industrialization (measured by employment or output shares) and incomes has shifted downwards and moved closer to the origin. This means countries are running out of industrialization opportunities sooner and at much lower levels of income compared to the experience of early industrializers. Asian countries and manufactures exporters have been largely insulated from those trends, while Latin American countries have been especially hard hit. Advanced economies have lost considerable employment (especially of the low-skill type), but they have done surprisingly well in terms of manufacturing output shares at constant prices. While these trends are not very recent, the evidence suggests both globalization and labor-saving technological progress in manufacturing have been behind these developments. The paper briefly considers some of the economic and political implications of these trends.
738 citations
TL;DR: In this article, a strong positive relationship between natural resource exports and urbanization in a sample of 116 developing nations over the period 1960-2010 was found. But, although the development literature often assumes that urbanization is synonymous with industrialization, patterns differ markedly across developing countries.
Abstract: We document a strong positive relationship between natural resource exports and urbanization in a sample of 116 developing nations over the period 1960–2010. In countries that are heavily dependent on resource exports, urbanization appears to be concentrated in “consumption cities” where the economies consist primarily of non-tradable services. These contrast with “production cities” that are more dependent on manufacturing in countries that have industrialized. Consumption cities in resource exporters also appear to perform worse along several measures of welfare. We offer a simple model of structural change that can explain the observed patterns of urbanization and the associated differences in city types. We note that although the development literature often assumes that urbanization is synonymous with industrialization, patterns differ markedly across developing countries. We discuss several possible implications for policy.
452 citations
TL;DR: In this article, the authors explored whether the low levels of industrialization in developing countries are attributable to long-term changes in opportunities available to the sector around the globe, and found that the manufacturing sector's value added and employment contribution to world GDP and employment, respectively, have not changed significantly since 1970.
229 citations
TL;DR: The author is a widely respected international specialist who mixes orthodox and unorthodox solutions according to how he perceives development policy has worked in the past as mentioned in this paper. In this article, he sh...
Abstract: The author is a widely respected international specialist who mixes orthodox and unorthodox solutions according to how he perceives development policy has worked in the past. In this article, he sh...
219 citations
TL;DR: In a country panel since 1960, the estimated annual convergence rate for GDP is 1.7%, conditional on time-varying explanatory variables as discussed by the authors, which is misleadingly high.
Abstract: In a country panel since 1960, the estimated annual convergence rate for GDP is 1.7%, conditional on time-varying explanatory variables. With country fixed effects, the estimated convergence rate is misleadingly high. With data starting in 1870, country fixed effects are reasonable and the estimated convergence rate is 2.6%. Combining the two estimates suggests conditional convergence close to the ‘iron-law’ rate of 2%. With post-1960 data, estimation without country fixed effects reveals positive effects of GDP and schooling on law and order and democracy – consistent with the modernisation hypothesis. With post-1870 data, estimation without or with country fixed effects indicates modernisation.
217 citations
Cites background from "Unconditional Convergence in Manufa..."
...Rodrik (2013) finds unconditional convergence in labour productivity across manufacturing industries for recent decades in 118 countries....
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References
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6,503 citations
01 Jan 1991
TL;DR: In this paper, the authors use the neoclassical growth model as a framework to study convergence across the forty-eight contiguous U.S. states using data on personal income since 1840 and on gross state product since 1963.
Abstract: A key economic issue is whether poor countries or regions tend to grow faster than rich ones: are there automatic forces that lead to convergence over time in the levels of per capita income and product? The authors use the neoclassical growth model as a framework to study convergence across the forty-eight contiguous U.S. states. They exploit data on personal income since 1840 and on gross state product since 1963. The U.S. states provide clear evidence of convergence, but the findings can be reconciled quantitatively with the neoclassical model only if diminishing returns to capital set in very slowly. Copyright 1992 by University of Chicago Press.(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)
3,139 citations
Posted Content•
TL;DR: Maddison's 1870-1979 data are analyzed, showing the historically unprecedented growth in productivity, GDP per capita and exports and the remarkable convergence of productivities of industrialized market economies, with convergence apparently shared by planned economies but not less developed countries as discussed by the authors.
Abstract: Maddison's 1870-1979 data are analyzed, showing the historically unprecedented growth in productivity, GDP per capita and exports and the remarkable convergence of productivities of industrialized market economies, with convergence apparently shared by planned economies but not less developed countries. Productivity lag's relation to "deindustrialization," unemployment and balance of payments is examined. The data confirm that U.S. productivity growth fell behind its extraordinary postwar peak but probably not below its long term level. It is also shown that more rapid productivity growth of other countries may only be a normal concommitant of convergence. Copyright 1986 by American Economic Association.(This abstract was borrowed from another version of this item.)
2,826 citations
"Unconditional Convergence in Manufa..." refers background in this paper
...2 Some studies also find unconditional convergence among the richer OECD countries, but it is difficult to know what to make of this result in light of the obvious sample-selection bias (Baumol 1986; DeLong 1988)....
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Book•
01 Jan 2005
TL;DR: The Handbook of Economic Growth as discussed by the authors summarizes recent advances in theoretical and empirical work while offering new perspectives on a range of growth mechanisms, from the roles played by institutions and organizations to the ways factors beyond capital accumulation and technological change can affect growth.
Abstract: Volumes 2A and 2B of The Handbook of Economic Growth summarize recent advances in theoretical and empirical work while offering new perspectives on a range of growth mechanisms, from the roles played by institutions and organizations to the ways factors beyond capital accumulation and technological change can affect growth. Written by research leaders, the chapters summarize and evaluate recent advances while explaining where further research might be profitable. With analyses that are provocative and controversial because they are so directly relevant to public policy and private decision-making, these two volumes uphold the standard for excellence in applied economics set by Volumes 1A and 1B (2005). It offers definitive theoretical and empirical scholarship about growth economics. It empowers readers to evaluate the work of other economists and to plan their own research projects. It demonstrates the value of empirical testing, with its implicit conclusion that our understanding of economic growth will help everyone make better decisions.
2,498 citations
Posted Content•
TL;DR: Maddison's 1870-1979 data are analyzed, showing the historically unprecedented growth in productivity, gross domestic product per capita and exports and the remarkable convergence of productivities of industrialized market economies, with convergence apparently shared by planned economies but not less developed countries.
Abstract: Maddison's 1870-1979 data are analyzed, showing the historically unprecedented growth in productivity, gross domestic product per capita and exports and the remarkable convergence of productivities of industrialized market economies, with convergence apparently shared by planned economies but not less developed countries. Productivity lag's relation to "deindustrialization," unemployment, and balance of payments is examined. The data are shown to suggest a tempered view of the slowdown in U.S. productivity growth and its lag behind other countries.
2,424 citations