Quality of Growth and Poverty Incidence in Low Income Countries: The Role of Manufacturing

Sarah Lynne Daway-Ducanes, Geoffrey Ducanes and Raul Fabella

No 201708, UP School of Economics Discussion Papers from University of the Philippines School of Economics

Abstract: There has been a growing conversation about the revival of Manufacturing to push back growing inequality and reduce poverty. We discuss the pathways by which a higher share of the Manufacturing sector in GDP may bring about lower poverty incidence while a higher share of Services may have the opposite effect. We first compare the poverty reduction experiences of the Philippines whose growth has been largely Services-led in the last two decades with that of China and Vietnam, whose growth have, for the most part, been Manufacturing-led. We then present evidence based on cross-country panel data for low income countries that the Manufacturing share in GDP exhibits a significant negative association with poverty incidence while the higher Services share exhibits a significant positive association with poverty incidence. Low income countries seeking more inclusive growth may do better if they privilege their Manufacturing sector over the Services sector.

Keywords: quality of growth; low income countries; poverty incidence; industrial structure; manufacturing; services (search for similar items in EconPapers)
JEL-codes: I3 O14 O5 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2017-12
New Economics Papers: this item is included in nep-sea
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Citations: View citations in EconPapers (1)

Published as UPSE Discussion Paper No. 2017-08, December 2017

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Persistent link: https://EconPapers.repec.org/RePEc:phs:dpaper:201708

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