Premature deindustrialization, global value chains, and Dutch disease in Asian latecomer economies

Hiroyuki Taguchi () and Ni Lar

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines premature deindustrialization in Asian latecomer developing economies and its affecting factors from the perspectives of participation in global value chains (GVC) and the Dutch Disease. We first show the degree of deindustrialization according to country-specific fixed effects in estimating the manufacturing-population-income relationships. Second, we reveal the contributions of GVC participation and the Dutch Disease effects to the country-specific fixed effect by replacing the fixed effect with these factors in the estimation. The econometric empirical estimations yielded several findings. First, the fixed-effect model estimation results suggested the existence of deindustrialization and its risk in all Asian latecomer economies, with China, Japan, and Korea as benchmark cases. Second, the factor analyses revealed that the lack of GVC participation in Asian latecomer economies contributes to their country-specific deindustrialization by around 40% on average; and as for the Dutch Disease effects, its contributions to deindustrialization is around 10% on average, although the resource-rich developing economies have relatively larger contributions to their deindustrialization.

Keywords: Premature deindustrialization; Global value chains; Dutch Disease; Asian latecomer economies; Fixed effect model (search for similar items in EconPapers)
JEL-codes: O14 O53 (search for similar items in EconPapers)
Date: 2025-04
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Published in Journal of International Economic Studies 39 (2025): pp. 91-111

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