Industrialization, employment and poverty
Alejandro Lavopa & Adam Szirmai
#2012-081
During the post-war period, there was consensus among development
theorists that industrialization constituted the prime avenue for
economic development. Manufacturing was identified as the main engine of
economic growth, economic development and social progress. In recent
years, however, the role of manufacturing has been challenged and
questions have been raised concerning the continued importance of
manufacturing for economic development, catch up and poverty reduction
in developing countries. Some observers even argue that we live in an
era of service-led growth
This report assesses the extent to which these challenges are justified,
focusing on the role played by manufacturing with regard to the
different dimensions of economic development: growth, employment
creation and poverty reduction. The main question addressed in this
report is whether or not manufacturing plays an important role in the
process of economic growth, the creation of new employment and the
alleviation of poverty in the least developed economies and in emerging
middle-income countries. This report argues that manufacturing continues
to be of considerable importance for economic development, employment
creation and the reduction of poverty. Manufacturing is not the only
sector of importance in developing countries of the present period. But
the relative neglect of industrialization and industrial investment in
modern policy debates is not justified. It is a sector which deserves
special attention from policy makers and the financial community.
Keywords: industrialization, manufacturing, employment creation, poverty reduction
JEL classification: 014, J21, I 32