Industrialisation partielle

Abstract

In Developing Countries, at a glance, fast economic upturn is promising in terms of in- dustrialization. The relationship between the development and the industrialized sectors of the economy has often been examined under the lens for the prime advanced economies but much less for developing countries. The purpose of this thesis is to analyse the approaches of industrialization in the developing countries. First, this work aims at highlighting the main characteristics of industrialization. Secondly, we will underline the contributions of the structural change approach. Then, we will bring forth the causes that led to a prema- ture deindustrialization. We undertook a systematic review of studies assessing the role of a sectoral industrialization, focusing on the manufacturing sector and development on developing countries. The perspectives on the subject have changed significantly since the publication of an earlier influential article in 1955 (Chenery, 1955 [Che55]). However, we highlighted the common characteristics of the new approaches and suggested an analytical framework in order to answer our main interrogatives.

Abstract

Dans les pays en développement, la reprise économique rapide est prometteuse en ter- mes en d’industrialisation. La relation entre le développement et les secteurs industriels de l’économie a été souvent examiné sous l’œil des économies avancés mais beaucoup moins pour les pays en développement. L’objectif de ce mémoire est d’analyser les differents ap- proches de l’industrialisation dans les pays en développement. Premièrement, ce mémoire vise a mettre en évidence les principales caractéristiques de l’industrialisation sectorielle. Deuxièmement, on va mettre l’accent sur les contributions de l’approche du changement structurel. Finalement, on mettra en évidence les causes qui conduisent à une désindus- trialisation prématurée. Nous avons entrepris une revue systématique d’études évaluant le rôle de l’industrialisation surtout dans la manufacture et la croissance basé en pays en développement. Les perspectives sur le sujet ont changé significativement dès la publica- tion anticipée d’un article prédominant en 1955 (Chenery,1955[Che55]). Cependant, on a mit en évidence les caractéristiques communes de ces deux approches et on a suggéré un cadre analytique afin de répondre nos questions principales

Keywords: Industrialization, deindustrialization, manufacturing, Development, unconditional Convergence, global value chains.

Mots clés : Industrialisation, désindustrialisation, manufacture, development, convergence conditionnelle, chaînes de valeur.

Contents

1 Introduction 1

2 Traditional Approach: Industrialization for Development 3 2.1 DriversofIndustrialization ............................ 3 2.2 PathsofStructuralChange ............................ 5 2.3 NewStructuralEconomics ............................ 6

3 Trends in Industrialization: Recent Works 7 3.1 UnconditionalConvergence............................ 7 3.2 GlobalValueChains ............................... 8 3.3 Deindustrialization ................................ 10

4 Effects of current non industrialization deindustrialization modalities on Develop- ment

11

4.1 Economicconsequences ............................. 12 4.1.1 Economicgrowthpotential........................ 12 4.1.2 Productivityandemployment ...................... 13 4.1.3 Trade................................... 14

4.2 PoliticalConsequences .............................. 14 4.2.1 Democratization ............................. 14 4.2.2 Education................................. 15

5 Conclusion 16

6 Appendix 21

Abbreviations

• ISI: Import substitution industrialization

• LDC: Least Developed Countries

• MANEMP: Manufacturing Employment Share

• NOMVA: (MVA share at current prices)

• RD : Research and Development

• REALMVA (MVA share at constant prices)

• WB: World Bank

• LME: Liberal Market Economies

• CME: Coordinated Market Economies

• GVC: Global Value Chain

• ICT: Information and Communication Technologies

1 Introduction

“The context in which industrialization was pursued India was a very poor country when she became independent in 1947. The policies of the colonial government were designed to benefit Britain at the cost of India. By denying India the opportunity to develop economically, Britain effectively deindustrialized a country which had a large share of her labour force en- gaged in industry. Traditional industries were destroyed. Millions of Indians were thrown out of employment. Some modern manufacturing industries developed. However, these were not sufficient to prevent the fall in the proportion of the people dependent on industry. At the time of independence, industry together with mines accounted for only about 17 per cent of the national income. Agriculture’s share was 49 per cent and that of the construction and services sector 34 per cent. Employment in industries and mines amounted to 9.5 percent of the total work force in 1951. In contrast, agriculture employed 71.8 per cent of the workforce and construc- tion and services 18.7 per cent”. (T. J. Byres, 1998[Byr98]). However, the distribution of the workforce has changed across time and economic sectors. Nowadays employment in industries represents 25 per cent, 44 per cent for agriculture and 31 per cent for services (International Labour Organization database).

For the majority of the developing countries, industrialization is a fundamental objective, which is considered necessary to achieve sustained economic growth, create employment op- portunities and lead to diversification and modernization of their economies. In other words it encourages development. However, the policies chosen by each country, will play a different role in the process and pattern of industrialization in these countries (Soumyatanu Mukherjee, Trade and development Review, 2012)

In fact, the definition of industrialization is very ambiguous and still the center of many de- bates especially in developing countries. Hewitt Al define this term in three ways: first, as “the production of all material goods not grown directly on the land”. Secondly “as the economic sector comprising mining, manufacturing and energy”. Finally as “a particular way of organiz- ing production and assumes there is a constant process of technical and social change which continually increases society’s capacity to produce a wide range of goods” (Hewitt Al.1992). In this perspective, industrialization will increase the production of goods and services, which will naturally affect the society. For this reason, we can assume a close link between industrial- ization and development (Ray Kiely, 1998[Kie98]). Typically, most attention is paid to the size of the manufacturing sector as economic development is often thought to be closely associated with industrialization (Ray Kiely, 1998[Kie98])

Nevertheless, over the last three decades the importance of manufacturing has decreased, resulting in premature deindustrialization or non-industrialization in developing countries. The term deindustrialization refers to the relative decline of manufacturing at national level. The big problem for these developing countries is that they are turning into service economies without

1

having gone through a proper experience of industrialization (Dani Rodrik, 2015[Rod15])

We will focus on selective studies that will suit three main topics: industrialization explained by structural change and the adoption of GVC; the similarities experienced by an unconditional convergence of the manufacturing sector and the consequences of a premature deindustrializa- tion. In order to facilitate the understanding of the contexts and processes, we did an inductive analysis with an holistic perspective to trace down the traditional approaches, summarize the article’s contributions, and give an overall vision of the issues and limitations faced by the industrial policies on the economy. The objective of this thesis is to attempt to answer two questions: First, does industrialization still plays a key role on development? And what are the

risks of non industrialization or deindustrialization for developing countries?

To answer these questions we summarized the recent debates on partial unbalanced indus- trialization and the risks of deindustrialization in developing countries. The thesis consists of three parts. The first two parts outline the essential features of the traditional and the modern approaches to industrialization and development, respectively. The third part shows the perils of current non industrialization and deindustrialization modalities on development; in order to

highlight the main risks.

2

2 Traditional Approach: Industrialization