Industrial Development Report

Too often, demand is not considered when discussing industrial development. But the fact that manufacturing consumption is the most visible result of industrial development, and one of its most important drivers, calls for attention. This report argues that under the right set of conditions the consumption of manufacturing goods can set in motion a virtuous circle of income creation, demand diversification and long-run development. How? By providing new and better goods that become cheaper through time, industrial development creates real incomes for all which in turn lead to changes in consumption patterns that stimulate further creation of new and better goods restarting the circle. This circle, however, is not necessarily socially inclusive or environmentally sustainable, thus calling for specific policies to achieve these important goals. This report examines identifies the main challenges and opportunities that arise from them taking into account the sustainable development agenda.

The Industrial Development Report 2013 examines the role of structural change and employment and explores the underlying drivers of structural change in manufacturing. While manufacturing employment is growing in developing countries, its decrease in developed countries is being mitigated by the rise in manufacturing-related services employment. The food and beverages and textiles and garments industries offer least developed countries tremendous potential for industrialization, whereas high-tech industries hold numerous opportunities for developed countries to invest and innovate and to thus sustain jobs. The impact of the critical drivers of structural change and industrialization—namely costs, technology, demand and resource efficiency—to sustain employment hinges on the industrial policies adopted. These must therefore be geared towards the structural transformation of the economy and will only be effective if the policy-making process plays as important a role as the policy content.

The report discusses the opportunities and constraints faced by two groups of countries: the countries of the bottom billion trying to break into global markets for manufactured goods, and the middle-income countries that are striving to move up to more sophisticated manufacturing. It focuses predominantly on manufacturing, but also discusses resource extraction, which is the other major type of industrialization in developing countries.

The Industrial Development Report is intended to build on development policy experience and contribute to a refinement of the international development agenda. The Report pays special attention to current needs and capabilities in the developing countries in general, and the least developed among them in particular. The 2004 edition addresses the challenges faced by Sub-Saharan African countries in furthering their efforts towards poverty reduction and reaching the Millennium Development Goals.