Risk of premature deindustrialization: the case of the latecomer’s developing countries in Asia

Taguchi, Hiroyuki (2022): Risk of premature deindustrialization: the case of the latecomer’s developing countries in Asia. Published in:

Abstract

This paper aims to examine the risk of premature deindustrialization in the latecomer’s developing countries in Asia with a focus on manufacturing output ratio by using the latecomer’s index. This study’s contributions are to target Asian economies that were treated as a group with comparative advantages in manufacturing by previous studies, and to adopt the latecomer’s index to show downward shifts of the latecomer’s manufacturing-income relationship that implies the existence of premature deindustrialization risk. The empirical analysis identified the downward shifts of manufacturing-income relationship in globalization processes, i.e., premature deindustrialization risk in the latecomer’s developing countries in Asia, and also showed that the risk was higher in the manufacturing trade-deficit countries than the trade-surplus ones, and in South Asian countries than in Southeast countries. The strategic policy direction in the latecomers who have faced premature deindustrialization risk is to facilitate their participations in global value chains to mitigate and avoid the risk.

• Item Type: MPRA Paper
• Language: English
• Keywords: Premature deindustrialization, Latecomers, Developing countries in Asia, Manufacturing output, Global value chains
• Subjects: F - International Economics > F1 - Trade > F10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East

References

Andriyani, V.E. and Irawan, T. 2018. Identification of Premature Deindustrialization and Its Acceleration in Indonesia (Period 1986-2015). Jurnal Ekonomi dan Kebijakan Pembangunan, 7: 78-101.

Casella, B., Bolwijn, R., Moran, D. and Kanemoto, K. 2019. Improving the analysis of global value chains: the UNCTAD-Eora Database. Transnational Corporations, 26(3). New York and Geneva: United Nations.

Castillo, M. and Neto, A.M. 2016. Premature Deindustrialization in Latin America. ECLAC-Production Development Series, No. 205.

Clark, C. 1940. The Conditions of Economic Progress, New York: Macmillan.

Dasgupta, S. and Singh, A. 2007. Manufacturing, Services, and Premature Industrialization in Developing Countries: A Kaldorian Analysis. In Mavrotas, C. and Shorrocks, A. (eds.), Advancing Development, New York: Palgrave-Macmillan.

Hamid, N. and Khan, M. 2015. Pakistan: A Case of Premature Deindustrialization? The Lahore Journal of Economics, 20: 107-141.

Hausman, J. 1978. Specification Tests in Econometrics. Econometrica, 46: 1251-1271.

Imbs, J. 2013. The Premature Deindustrialization of South Africa. In: Stiglitz, J.E., Yifu, J.L., and Patel, E. (eds.), The Industrial Policy Revolution II, chapter 6, 529-540, New York: Palgrave Macmillan.

Islami, M.I. and Hastiadi, F.F. 2020. Nature of Indonesia’s Deindustrialization. Economics Development Analysis Journal, 9: 220-232.

Jones, R.W. and Kierzkowski, H. 1990. The role of services in production and international trade: a theoretical framework. In

Jones, R. and Krueger, A. (eds.), The Political Economy of International Trade: Essays in Honor of Robert E. Baldwin, Oxford: Basil Blackwell.

Jones, R.W. and Kierzkowski, H. 2005. International trade and agglomeration: an alternative framework. Journal of Economics, 10: 1-16.

Kaldor, N. 1967. Strategic Factor in Economic Development, Ithaca: Cornel University.

Kimura, F. 2006. International production and distribution networks in East Asia: Eighteen facts, mechanics, and policy implications. Asian Economic Policy Review, 1: 326-344.

Kimura, F., Takahashi, Y. and Hayakawa, K. 2007. Fragmentation and Parts and Components Trade: Comparison between East Asia and Europe. North American Journal of Economics and Finance, 18: 23-40.

Nayyar, G., Cruz, M. and Zhu, L. 2018. Does Premature Deindustrialization Matter? The Role of Manufacturing versus Services in Development. Policy Research Working Paper, No. 8596, World Bank Group.

Rasiah, R. 2011. Is Malaysia Facing Negative Deindustrialization? Pacific Affairs, 84: 715-736.

Ravindran, R. and Babu M.S. 2021. Premature Deindustrialization and Income Inequality in Middle-income Countries. WIDER Working Paper, No. 2021/8, World Institute for Development Economics Research, United Nations University.

Rodrik, D. 2013. Unconditional convergence in manufacturing. Quarterly Journal of Economics, 128: 165-204.

Rodrik, D. 2016. Premature Deindustrialization. Journal of Economic Growth, 21: 1-33.

Sato, H. and Kuwamori, H. A Note on Premature Deindustrialization. IDE Discussion Paper, No. 763, Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO).

Taguchi, H. and Thet. M.S. 2021. Quantitative linkage between global value chains’ backward participation and logistics performance in the host country: a structural gravity model analysis of emerging ASEAN economies. Asia-Pacific Journal of Regional Science, Published online, https://doi.org/10.1007/s41685-020-00187-z.

UNCTAD 2013. World Investment Report - Global Value Chains: Investment and Trade for Development, Geneva: the United Nations Conference on Trade and Development.

World Bank 2016. Making Global Value Chains: Work for Development, Washington DC: World Bank.

World Bank 2020. World Development Report - Trading for Development in the Age of Global Value Chains, Washington DC: World Bank.