Industrial Development Report 2013

Sustaining Employment Growth - The Role of Manufacturing and Structural Change

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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.



Industrial structural change and manufacturing employment

Ever since the industrial revolution, manufacturing has been the “engine of growth” for output and employment, sparked by major technological change and mechanization and leading to unprecedented and sustained long-term economic growth and rising incomes. The higher incomes led to an increase in demand for manufactured products and a relative decline in spending on agricultural goods. Productivity gains raised demand further as prices of manufactures declined even further relative to other goods and services. Accompanying these changes were major labour force and population shifts from agriculture and rural areas, initially into manufacturing and to urban areas, and later into services. This selfreinforcing industrial development process lasted for decades, if not centuries, as a result of which what have become today’s developed economies generated hundreds of millions of jobs in industry.


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