Forks in the Road: Globalization, Deindustrialization, and Economic Growth Pathways

Azat Aituar (), Omar Bolatbay, Nurlan Abdukadyrov and Shynggys Abdukhamet
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Azat Aituar: International School of Economics, Maqsut Narikbayev University, Astana Z05K8C9, Kazakhstan
Omar Bolatbay: International School of Economics, Maqsut Narikbayev University, Astana Z05K8C9, Kazakhstan
Nurlan Abdukadyrov: United Airlines, Inc., Chicago, IL 60606, USA
Shynggys Abdukhamet: Aldente AI, Astana Z05H8K2, Kazakhstan

Economies, 2025, vol. 13, issue 12, 1-45

Abstract: Utilizing a panel of 125 economies spanning from 1970 to 2019, we examine the role of manufacturing as a fundamental pillar of development in the era of global value chains (GVCs). We employ a layered clustering approach that categorizes countries based on income per capita and structural characteristics, such as the share of manufacturing, export complexity, resource dependence, productivity, and wages while maintaining consistency over time. Prior to 1990, most trajectories exhibited a progression from early industrialization to diversification, enhanced industrialization, increased export complexity, rising income levels, and subsequently to deindustrialization. However, post-1990, deindustrialization began to permeate middle- and low-income economies, with export complexity frequently increasing in the absence of deeper domestic industrial development. Two distinct manufacturing pathways are evident: one characterized by functional specialization amid moderate manufacturing levels and another exemplified by the East Asian model, which demonstrates sustained high manufacturing intensity. Resource-driven growth has led to income increases without significant structural transformation, and such growth has not enabled economies to achieve high-income status without initial industrialization. Manufacturing remains essential as a domestic foundation; therefore, policy efforts should focus on securing this base, enhancing capabilities within higher-value GVCs, and strategically investing resource revenues to bolster industrial capacity.

Keywords: country classification; economic growth; machine learning; globalization; industrialization (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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