Beyond manufacturing export-led growth
Success in development over the past half century was greater than anyone anticipated, seen starkly in the contrast between Myrdal’s predictions for Asia just fifty years ago with what happened. Our understanding of development has changed: There is an enormous gap in knowledge as well as in resources that has to be closed. In all sectors, there are huge disparities in productivities within countries, matching those between countries. Most of the advanced countries are engaged in service sector—80% or more—so if there are disparities in standards of living, it relates especially to productivity in these service sectors.
The basis of the success of growth over the past half century was manufacturing export-led growth. But manufacturing won’t play the same role in the coming decades that it has played in the past, simply because the share of global employment in manufacturing will be declining. The increase globally in manufacturing employment won’t suffice to meet the needs for new jobs, especially in Africa with its burgeoning population. It won’t be able to do so in the future to anything like the extent that it did so in the past. There has to be another strategy—one that performs some of the essential roles that manufacturing export-led development did over the past half century.
In this lecture, I deconstruct what enabled manufacturing to provide the growth that it did in the past—how it facilitated structural transformation. It provided needed foreign exchange, promoting learning, and provided employment all at the same time. Successful development policy will need to be explicitly more multi-pronged, addressing separate “challenges” that the manufacturing sector addressed simultaneously.
We show how a coordinated multi-sector strategy has the prospect of attaining the same success of the old manufacturing export-led strategy.
The concept of the development state, with development policies such as modern “industrial policies,” and development institutions, such as development banks, will continue to be central, but will have to be redefined in response to these ongoing changes. Government will need to play an important role in the new structural transformation towards a modern economy—which will not in general be a manufacturing economy but a modern services economy; and in Africa’s next phase of development modern agriculture will also be vital. For those countries lucky enough to have a rich endowment of resources, successful development can rest on a strong natural resource base, but with the right policies, what has seen to be a problem—sometimes called the “natural resource curse”—can be converted into a blessing.
In advancing these new development strategies will require greater balance between the market, the state, and the community, a perspective articulated in the Stockholm Statement.
Plenary 4 | Keynote: Beyond manufacturing export led growth
Keynote | Beyond manufacturing export led growth by Joseph Stiglitz
Discussant: Kaushik Basu and Q&A
Ann E. Harrison | Chair
Ann E. Harrison is the William H. Wurster Professor of Multinational Management at the Wharton School, University of Pennsylvania, a Research Associate at the National Bureau of Economic Research, Research Fellow at the CEPR and an affiliate of the International Growth Centre in London. She previously served as the US Representative on the United Nation’s Committee on Development Policy. Professor Harrison has also serves as the Director of Development Policy at the World Bank.
Joseph Stiglitz | Presenter | Presentation | Paper
Joseph E. Stiglitz is an American economist and a professor at Columbia University. He is also the co-chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and the Chief Economist of the Roosevelt Institute. A recipient of the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal in 1979, he is a former senior vice president and chief economist of the World Bank and a former member and chairman of the (US president's) Council of Economic Advisers. He is the author of numerous books, and several bestsellers.
Kaushik Basu | Discussant
Kaushik Basu is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution. He is the former Chief Economist and Senior Vice President of the World Bank. Professor Basu is a Fellow of the Econometric Society and received the title Padma Bhushan which is one of the highest civilian awards given by the President of India. Professor Basu’s contributions span development economics, welfare economics, industrial organization and game theory.