Manufacturing as the Key Engine of Economic Growth for Middle-Income Economies

Dan Su and Yang Yao
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Dan Su: Asian Development Bank Institute

No 573, ADBI Working Papers from Asian Development Bank Institute

Abstract: This paper revisits the role of the manufacturing sector during the middle-income stage. By exploiting a large dataset that covers internationally comparable sectoral information, we prove that the manufacturing sector is imbued with three important characteristics. First, for middle-income economies, manufacturing pulls along services, instead of the other way around. A decline in the manufacturing sector growth rate will negatively affect the growth rate of the services sector, in both the short-run and long-run meanings. Second, we show that manufacturing development not only promotes the incentives of savings, but also accelerates the pace of technological accumulation. Third, an increased share of the manufacturing sector in middle-income economies can enhance the utilization of human capital and economic institutions. Our empirical findings indicate that the manufacturing sector is still the key engine of economic growth for middle-income economies.

Keywords: manufacturing sector; middle-income status; middle-income economies; empirical research; dataset; economic growth; growth engine; services; savings; technological accumulation; human capital; economic institutions (search for similar items in EconPapers)
JEL-codes: L16 O14 O47 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2016-05-25
New Economics Papers: this item is included in nep-gro and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Manufacturing as the key engine of economic growth for middle-income economies (2017)
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