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For Poor Countries, Well-Worn Path to Development Turns Rocky
This is a somewhat longer article, worth reading all the way through. Another set of data suggesting that humans are going to have to come up with a new economic model that isn't based on "earning a living," in the ways we currently understand it.
Harvard economist Dani Rodrik, who began compiling data on manufacturing world-wide a few years ago, says he is seeing growing evidence of what he calls “premature deindustrialization”—the idling or shrinking of manufacturing sectors as a share of the economy in poor countries like India that never industrialized very much in the first place.
In the early 1960s, when Mr. Gajjar opened his engine factory in Rajkot, manufacturing output in India was around 12% of the economy. The share peaked at 19% in the 1990s, and has since fallen to around 17%.
South Korea’s manufacturing sector, by contrast, grew to 36% of the economy by 2010 from 3% in the early 1960s. The path was similar in China, where manufacturing also accounts for around a third of the economy.
Africa looks more like India. In South Africa, manufacturing was 15% of output in 1962 and peaked at 25%—in 1981. By 2011, the share was closer to 18%. Factory activity in fast-modernizing Ethiopia hasn’t managed to grow beyond 6% of the economy. In Tanzania, it peaked at 13% in 1976 and dropped since to around 10%.
...
Factory automation and robotics are reducing the need for unskilled workers from the countryside to staff assembly lines.
Industrial latecomers now have to compete against China, whose massive, integrated manufacturing machine has made it the world’s factory floor and created a huge barrier to entry. Tariffs are falling and trade is becoming freer, making it tougher for developing countries to shelter their producers from foreign competition.
And, as developed countries age, there are signs that global demand for everything from cars to furniture is plateauing. Since the 2007-2008 financial crisis, world exports and imports have been expanding more slowly than world economic growth for the first time in decades.
“The room for newcomers is getting narrower,” Mr. Rodrik said. “I doubt that we’re going to see a repeat of history.”
http://www.wsj.com/articles/for-poor-countries-well-worn-path-to-development-turns-rocky-1448374298
In the early 1960s, when Mr. Gajjar opened his engine factory in Rajkot, manufacturing output in India was around 12% of the economy. The share peaked at 19% in the 1990s, and has since fallen to around 17%.
South Korea’s manufacturing sector, by contrast, grew to 36% of the economy by 2010 from 3% in the early 1960s. The path was similar in China, where manufacturing also accounts for around a third of the economy.
Africa looks more like India. In South Africa, manufacturing was 15% of output in 1962 and peaked at 25%—in 1981. By 2011, the share was closer to 18%. Factory activity in fast-modernizing Ethiopia hasn’t managed to grow beyond 6% of the economy. In Tanzania, it peaked at 13% in 1976 and dropped since to around 10%.
...
Factory automation and robotics are reducing the need for unskilled workers from the countryside to staff assembly lines.
Industrial latecomers now have to compete against China, whose massive, integrated manufacturing machine has made it the world’s factory floor and created a huge barrier to entry. Tariffs are falling and trade is becoming freer, making it tougher for developing countries to shelter their producers from foreign competition.
And, as developed countries age, there are signs that global demand for everything from cars to furniture is plateauing. Since the 2007-2008 financial crisis, world exports and imports have been expanding more slowly than world economic growth for the first time in decades.
“The room for newcomers is getting narrower,” Mr. Rodrik said. “I doubt that we’re going to see a repeat of history.”
http://www.wsj.com/articles/for-poor-countries-well-worn-path-to-development-turns-rocky-1448374298