Is Manufacturing Still a Key to Growth ?

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Other

Is Manufacturing Still a Key to Growth ?

By Uri Dadush

Published on Feb 10, 2015

Source: OCP Policy Center

Manufacturing is declining as a share of GDP not only in advanced countries, but in developing countries as well. This new trend, a result of complex forces, should be seen on balance as a reason for development-optimism, not pessimism. In the 21st century economy, manufacturing remains important, but poor countries can attract investment, grow rapidly and diversify away from agriculture on the basis of many possible sources of comparative advantage, without artificially promoting manufacturing. At the heart of the modern development process is learning: by adopting techniques and practices from countries at the technology frontier poor countries can boost productivity across all sectors of the economy.

This policy paper takes an eclectic look at the role of manufacturing in today’s development process. It draws from the recent econometric literature, reviews the trends in world trade, and examines the comparative advantage of countries that have been successful in transforming their economies in recent years. Among these countries it examines briefly the case of Morocco, an interesting case of a country that has exhibited quite rapid growth and diversification in a troubled region. The paper draws some implications for policy, underscoring the importance of the four Cs: connectivity, capacity, cost and confidence.

Read the Full Text

This paper was originally published by the OCP Policy Center.

About the Author

Uri Dadush

Former Senior Associate, International Economics Program

Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.

Recent Work

Commentary
The Labors of Tsipras
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Economy Trade

Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

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