Manufacturing and Economic Growth in the Era of Globalization

• In Event: 473 - Section on Political Economy of the World-System Roundtables (one-hour)
  In Refereed Roundtable: Table 05. Growth and Development

Abstract

A central concern of research in development studies has been the investigation of the causes underlying uneven levels of development in the world economy. One common theme that emerges from this work is the importance of industrialization for both the economic development of the global South as well as the reduction of international income inequality. While some scholars argue that the global restructuring of manufacturing in the era of globalization presents novel opportunities for development in the South, others suggest the returns to manufacturing in the new international division of labor declines as globalization proceeds. Using first-difference models and a broad sample of both developed and less-developed countries in the time period 1970-2010, I find that the returns (economic growth) to manufacturing, measured as manufacturing share of employment, has tended to decline with the onset of globalization for less-developed countries. I also observe that this decline predominantly occurs after 1990. My results do not show a similar decline in returns to manufacturing activities for developed countries, suggesting that developed nations that deindustrialized faster grew at a slower pace.

Author

• Roshan Kumar Pandian, Indiana University-Bloomington