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Patterns of Industrialization and effects of country-specific conditions

Patterns of Industrialization and effects of country-specific conditions. IPD/JICA Task Force on Industrial Policy and Transformation Jordan, June 5-6, 2014 Nobuya Haraguchi. Motivations. To understand the process of industrial development

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Patterns of Industrialization and effects of country-specific conditions

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  1. Patterns of Industrialization and effects of country-specific conditions IPD/JICA Task Force on Industrial Policy and Transformation Jordan, June 5-6, 2014 Nobuya Haraguchi

  2. Motivations • To understand the process of industrial development • To identify development patterns and structural change • To find out the way in which country-specific conditions affect country’s industrial development

  3. Studying development characteristics of manufacturing industries Not only the patterns but also the development characteristics of manufacturing industries • Use of real value added per capita • Analysis on output (value added), employment and labor productivity together • Their changes as countries develop • Changes over time (time effects)

  4. Patterns of Manufacturing DevelopmentandShift of Comparative Advantage

  5. Manufacturing development patterns

  6. Model • RVA – real value added per capita • EMP – employment-population ratio • LP – labour productivity • RGDP – real GDP per capita(in constant PPP 2005) • RGDP2 – real GDP per capita square, • RGDP3 – real GDP per capita cubic • αc – country fixed effect • e – unexplained residual • i – manufacturing industry (ISIC 2 digit level - 18 industries) • Unbalanced panel data • Time series from 1963 – 2010; 75-110 countries depending on the industry • Model applied to large (with population more than 12.5 million) and small country groups separately • In addition, we assessed the effects of population density, natural resource endowment and time periods on industrial development.

  7. Non-parametric approach for estimation

  8. Estimated pattern with actual country observations Source: UNIDO estimate based on UNIDO INDSTAT2

  9. 95% confidence intervals (after anti-log) Source: UNIDO estimate based on UNIDO INDSTAT2

  10. Development patterns Electrical machinery and apparatus Chemical Motor vehicles Wearing apparel Textiles Fabricated metals Food and beverage Basic metals

  11. Development patterns Chemical Food and beverage Electrical machinery and apparatus Wearing apparel Fabricated metals Textiles Basic metals Motor vehicles

  12. Changes in growth rates Source: UNIDO estimate based on UNIDO INDSTAT2

  13. Food & beverages Wearing apparel Textiles Food and beverage Wearing apparel Food & beverage Textiles Textiles Wearing Apparel 1 >e ≥ 0.50.5 > e ≥ 0 0 >e ≥ - 0.5 - 0.5 > e ≥ -1 -1> e e ≥ 2 2 >e ≥ 1.51.5 >e ≥ 1

  14. Electrical machinery Rubber & plastic Electrical machinery Rubber plastic Electrical machinery Rubber & plastic 1 >e ≥ 0.50.5 > e ≥ 0 0 >e ≥ - 0.5 - 0.5 > e ≥ -1 -1> e e ≥ 2 2 >e ≥ 1.51.5 >e ≥ 1

  15. Effects of Country-Given Conditions

  16. Effects of Population Density and Resource Endowments on manufacturing value added Large countries Source: UNIDO estimate based on UNIDO INDSTAT2

  17. Time Specific Effects

  18. Emerging trends Textiles . . . . Source: UNIDO estimate based on UNIDO INDSTAT2

  19. Emerging trends (Employment pattern) Source: UNIDO estimate based on UNIDO INDSTAT2

  20. Emerging trends (Value added pattern) Source: UNIDO estimate based on UNIDO INDSTAT2

  21. Country-SpecificEffects

  22. Country experiences Source: UNIDO estimate based on UNIDO INDSTAT2

  23. Country experiences Source: UNIDO estimate based on UNIDO INDSTAT2

  24. Country experiences Source: UNIDO estimate based on UNIDO INDSTAT2

  25. Country specific effects Source: UNIDO estimate based on UNIDO INDSTAT2

  26. Speed of manufacturing development Source: UNIDO calculations based on UNIDO INDSTAT2

  27. Speed of structural change Source: UNIDO estimate based UNIDO INDSTAT2

  28. Graphic representation of the role of comparative advantage and country-specific and time effects in manufacturing development Country-specificand time effects Value added per capita Level deviation Industry B Speed Speed Industry A Comparative advantage GDP per capita (PPP) $3,000 $10,000 Source: UNIDO’s elaboration

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