Asia’s Industrial Transformation: The Role of Manufacturing and Global Value Chains (Part 1)

Jesus Felipe ()

No 549, ADB Economics Working Paper Series from Asian Development Bank

Abstract: This paper argues that the single most important factor that explains East Asia’s development success was its fast structural transformation toward industrialization, manufacturing in particular. Workers moved out of agriculture into manufacturing, and the sector diversified and upgraded its structure. Manufacturing activities are subject to increasing returns to scale, and many manufacturing goods have high income elasticities of demand. For these reasons, manufacturing is referred to as the “engine of growth.” It is in the context of industrialization that openness played an important role in East Asia’s success, i.e., the connection between “export-led growth” (the relaxation of the balance-of-payments constraint on foreign exchange) and industrialization. Part 1 of the paper documents the extent of structural transformation in developing Asia. Second, it analyzes the relationship between the exportled growth model (i.e., the relaxation of the balance-of-payments constraint on foreign exchange) and industrialization. Finally, it reviews the industrialization experiences of Japan and the Republic of Korea, and discusses the recent deindustrialization debate.

Keywords: balance-of-payment constraint; deindustrialization; engine of growth; export-led growth; industrialization; manufacturing; structural transformation (search for similar items in EconPapers)
JEL-codes: O10 O14 O25 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2018-07-25
New Economics Papers: this item is included in nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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