Via Instapundit, American Interest, and Project Syndicate:
Most of today’s advanced economies became what they are by traveling the well-worn path of industrialization. A progression of manufacturing industries – textiles, steel, automobiles – emerged from the ashes of the traditional craft and guild systems, transforming agrarian societies into urban ones. Peasants became factory workers, a process that underpinned not only an unprecedented rise in economic productivity, but also a wholesale revolution in social and political organization. The labor movement led to mass politics, and ultimately to political democracy.
Over time, manufacturing ceded its place to services…All other rich economies have gone through a similar cycle of industrialization followed by deindustrialization…deindustrialization is common and predates the recent wave of economic globalization.
…
Only a few developing countries, typically in East Asia, have been able to emulate this pattern…But the developing world’s pattern of industrialization has been different. Not only has the process been slow, but deindustrialization has begun to set in much sooner.
Click the link to see more: The Perils of Premature Deindustrialization by Dani Rodrik - Project Syndicate
Points:
- “It is not clear why developing countries are deindustrializing so early in their growth trajectories. One obvious culprit may be globalization and economic openness, which have made it difficult for countries like Brazil and India to compete with East Asia’s manufacturing superstars. But global competition cannot be the main story. Indeed, what is striking is that even East Asian countries are subject to early-onset deindustrialization.”
- “An immediate consequence is that developing countries are turning into service economies at substantially lower levels of income.”
- “The economic, social, and political consequences of premature deindustrialization have yet to be analyzed in full. On the economic front, it is clear that early deindustrialization impedes growth and delays convergence with the advanced economies.”
- “The social and political consequences are less fathomable, but could be equally momentous. Some of the building blocks of durable democracy have been byproducts of sustained industrialization: an organized labor movement, disciplined political parties, and political competition organized around a right-left axis.”
