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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.

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Cost and supply-side structural change drivers

This chapter looks at five main supply-side drivers of structural change in manufacturing: wages, skills, technological change, industrial organization and the overall business environment. Figure 4.1 shows the main supply and external demand drivers discussed in this and the following chapters. The list is by no means exhaustive, and not all the possible combinations of interactions have been included, due to a limited availability of evidence, but some of the key drivers of structural change and their interrelationships are discussed here.

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