PREMATURE DEINDUSTRIALISATION: THE INTERNATIONAL EVIDENCE

Emre Özçelik () and Erdal Özmen ()
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Emre Özçelik: Economics Program, Middle East Technical University, Northern Cyprus Campus, Northern Cyprus
Erdal Özmen: Department of Economics, Middle East Technical University, Ankara, Turkey

No 2001, ERC Working Papers from ERC - Economic Research Center, Middle East Technical University

Abstract: We investigate patterns and globalisation-related causes of premature deindustrialisation (PD) using a large panel of advanced (AE), emerging (EME) and developing (DE) economies. We find that, PD tends to be the case for all EME and DE, except E. Asian countries. African countries appear to be hit worst by PD. Globalisation-related determinants of PD vary across country groups. Higher trade openness leads to deindustrialisation in DE. Trade openness, however, enhances dependent industrialisation in Latin American countries and the ‘factory economies’ of E. Asia, which have stronger linkages to global value chains. It is our contention that development possibilities can be expanded by aiming at higher technology activities and more intense forward-linkages to global value chains. Our findings suggest that such strategic industrial policies at the levels of EME and DE have the potential to generate growth convergence at international level. It is our contention that development possibilities can be expanded by aiming at more intense linkages to global value chains, but proactive industrial policies at the levels of EME and DE are required to achieve such expansion.

Keywords: Developing Economies; Emerging Market Economies; Global Value Chains; Growth; Industrial Policy; Premature Deindustrialisation (search for similar items in EconPapers)
JEL-codes: L60 O10 O14 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2020-09, Revised 2020-09
New Economics Papers: this item is included in nep-fdg, nep-int, nep-sea and nep-tid
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