Digitalization and Industrialization: Friends or Foes



Jörg Mayer | United Nations Conference on Trade and Development

Recent industrialization patterns are causing increasing pessimism about manufacturing as an engine of development. Peak shares of manufacturing in total employment and output in today’s economies are lower and in many developing countries occur at lower levels of per capita income than in the now industrialized countries – a phenomenon known as “pre-mature” deindustrialization. In addition, the global trade slowdown and expected prolonged structurally weak growth in developed countries are darkening prospects for traditional export-oriented industrialization strategies. Moreover, international production sharing through global value chains has made different countries to adopt different modes of production in the same industrial sector, so that the productivity and employment gains from manufacturing have been determined less by sectoral specialization and more by modes of production. Finally, some argue that robotization puts at risk two-thirds of all jobs in developing countries, and that reshoring to developed countries further jeopardizes their manufacturing activities…

Large-scale use of digital technologies is still unfolding, particularly in developing countries, and the precise impact of digitalization remains uncertain. But a clear understanding of the channels through which these technologies may affect industrialization is crucial to monitoring and influencing these effects. The paper’s main contribution is to facilitate such a better understanding and to highlight what policies could make digitalization and industrialization complements, rather than substitutes, as well as allow for the benefits of digitalization to be shared widely.


[To read the original paper, click here.]

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