Premature deindustrialization, global value chains, and Dutch disease in Asian latecomer economies

Taguchi, Hiroyuki and Lar, Ni (2025): Premature deindustrialization, global value chains, and Dutch disease in Asian latecomer economies. Published in: Journal of International Economic Studies No. 39 (April 2025): pp. 91-111.

Abstract

This study examines premature deindustrialization in Asian latecomer developing economies and its affecting factors from the perspectives of participation in global value chains (GVC) and the Dutch Disease. We first show the degree of deindustrialization according to country-specific fixed effects in estimating the manufacturing-population-income relationships. Second, we reveal the contributions of GVC participation and the Dutch Disease effects to the country-specific fixed effect by replacing the fixed effect with these factors in the estimation. The econometric empirical estimations yielded several findings. First, the fixed-effect model estimation results suggested the existence of deindustrialization and its risk in all Asian latecomer economies, with China, Japan, and Korea as benchmark cases. Second, the factor analyses revealed that the lack of GVC participation in Asian latecomer economies contributes to their country-specific deindustrialization by around 40% on average; and as for the Dutch Disease effects, its contributions to deindustrialization is around 10% on average, although the resource-rich developing economies have relatively larger contributions to their deindustrialization.

• Item Type: MPRA Paper
• Language: English
• Keywords: Premature deindustrialization, Global value chains, Dutch Disease, Asian latecomer economies, Fixed effect model
• Subjects: 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

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