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.



Structural change and employment trends

This chapter attempts to make sense of the trends of structural change over the last 50 years. Structural change unfolds over time but is best analysed through the structure of countries’ economies with the same income level, even if that is attained at different points in time. The structural change of an economy is not just associated with the growth of that economy, but lies at its very core, because it corresponds to a transition from lower to higher productivity sectors. Up to roughly the income level of advanced economies, one can grasp such a transition by looking at shifts from one sector to another (mainly from agriculture to industry and services), but at higher incomes, average employment-to-output ratios converge and further evidence of structural change can only be seen within sectors.


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