How have China and other countries resolved the binding constraints in light manufacturing to create jobs and prosperity? This vital question is answered in a new book based on unprecedented access and detailed interviews at hundreds of Chinese firms in more than 15 cities (including the coastal regions that have fuelled the export boom), as well as visits to a dozen countries in Africa and Asia. The book, Tales from the Development Frontier: How China and Other Countries Harness Light Manufacturing to Create Jobs and Prosperity, focuses on labor-intensive manufacturing (apparel, leather goods, agribusiness, woodworking, and metal products). It is part of the Light Manufacturing in Africa Project being undertaken by a World Bank team in the Development Economics Vice Presidency. We draw from analytical reviews, case studies, and the testimony of individual entrepreneurs to show how developing countries can grow manufacturing to create jobs and foster prosperity.
Brace yourself for some dramatic new evidence about innovation and entrepreneurship – and and circle the dates October 16 and 17 on your calendar.
Propelling leading-edge ideas about competitiveness, Professor Mariana Mazzucato will be among the luminaries at a major conference at the World Bank in mid-October, organized by the Bank's global practice on Competitive Industries. An all-star array of policymakers, academics, business leaders and development practitioners will focus on today's top global economic-policy challenge: spurring growth and job creation.
Exploring “Making Growth Happen: Implementing Policies for Competitive Industries,” the conference in the Bank's Preston Auditorium will include Mazzucato among
some of the world’s foremost analysts of competitiveness. A professor at the University of Sussex in the U.K., Mazzucato’s iconoclastic new book – “The Entrepreneurial State: Debunking Public vs. Private Sector Myths” – is now rocking the economics world. Mazzucato's insights are forcing a rethinking about the essential role of the public sector in driving the investments that are shaping the modern economy.
Public sector? Shaping the economy? Yes, you read that right: Mazzucato amasses persuasive evidence that the government-funded development and deployment of advanced technologies has been pivotal in changing the economic landscape.
Government’s role as a growth catalyst has been just as creative as the role of the private sector – and perhaps even more venturesome. Despite their buccaneering bravado, for-profit firms have lately shied away from high-stakes, high-risk investments in unproven technologies. Mazzucato refutes the defeatist dogma that claims, falsely, that public-sector investment can never do anything right.
Successful industrial parks can drive economic competitiveness (Credit: World Bank, Flickr)
Why do so many industrial park programs fail? They are popular across the developing world, inspired perhaps by China, where they are widely used as a policy tool and where their products are impressive to the visitor: functional parks with many firms and bustling activity. But horror stories abound, even in China, of empty parks, subsidized land speculation and tax erosion, and often no parks at all. This has not dampened enthusiasm, however. The theory is simply too seductive. By providing high-quality, shared infrastructure to firms in specific areas, industrial parks are meant to create pockets of competitiveness that eventually spill over onto the rest of the economy. For capacity-constrained governments, they have the further appeal of focus.
The Chinese economy has changed dramatically over the last three decades. While its per-capita income was only a third of that of Sub-Saharan Africa in 1978, it has now reached an upper-middle income status, lifting more than half a billion people out of poverty. The numbers are dramatic: per capita income has doubled for more than a billion people in just 12 years. What was once a primarily rural, agricultural economy has been transformed into an increasingly urban and diversified economic structure, with decentralization and market-based relations rising relative to the traditional government driven command-based economy.
As the Carnival in Brazil kicked off last weekend, Brazilians were ready for a party. They have reasons to celebrate. Despite a lackluster GDP performance in the last two years, unemployment rates remain at record low levels.
For those of us following the US Election 2012, the words ‘manufacturing’ and ‘jobs’ are hard to miss. Building on that buzz, The Economist recently conducted a debate: “Will manufacturing return to the West?” While the US election is a good ten days away, the decision on this debate is out: Manufacturing will return to the west. Irrespective of the verdict, both the sides – opposing and defending the motion- have provided numerous insights in to the trends that are unfurling in China and US. Read them here.
Inequality, alongside jobs, is the proverbial elephant in the room amidst the US presidential elections. Joe Stiglitz has a new 'Campaign Stops' blog in the New York Times online that draws on The Economist magazine's special series from earlier this month. Stiglitz discusses the perils of underplaying the great divide between the one percent in the US and the middle class. Meanwhile, on the other side of the debate, Kevin Hasset of the American Enterprise Institute along with Aparna Mathur, write in the WSJ that inequality studies that focus mainly on pre-tax incomes are flawed because they overlook transfer payments such as food stamps, unemployment insurance and other safety net programs. Read the article here.
From the World Development Report 2013.
Jobs are on the move. The past four decades have been marked by the outsourcing of manufacturing tasks from industrial countries to the developing world, especially to East Asia.
I blogged a few months ago about a paper Justin Lin and I were writing that focused on applying the Growth Identification and Facilitation Framework in Nigeria. The paper has just recently been completed and is now available online.
In the meantime, attacks on the UN house in Abuja have highlighted the extreme social tensions experienced by Nigeria. Many of these tensions may be related to the country’s persistent poverty. In fact, notwithstanding high and sustained growth over the past decade, Nigeria’s job creation has barely kept up with the relentless growth of its workforce, and youth unemployment has further risen. Moreover, formal sector employment has fallen, as a result of privatization and civil service retrenchment, while employment in informal family agriculture has increased.
Nigeria urgently needs to increase employment intensity and sustainability of its growth performance, and our paper can be a useful tool for developing a strategy to do so.
Remember the famous joke about an economist who believes so much in rational expectation theory that he would not pick up a $100 dollar bill off the sidewalk under the pretense that if it were actually there someone would have already picked it up? A similar excuse may be invoked to justify why low-income countries that are currently facing high underemployment are not organizing themselves to seize the extraordinary bonanza of the 85 million manufacturing jobs that China will have to shed in the coming years because of fast rising wages for unskilled workers.
Economic development is a process of continuous industrial and technological upgrading in which each country, regardless of its level of development, can succeed if it develops industries that are consistent with its comparative advantage, determined by its endowment structure. As I explained in an earlier blog post for China to maintain GDP growth of nearly 10 percent a year in the coming decades, it must keep moving up the value chain and relocate many of its existing labor-intensive manufacturing industries to countries where wage differentials are large enough to ensure competitiveness in global production networks.
‘Gender Equality’ is a concept that's finally entering the mainstream. It connotes equal rights to education, to vote, to work, to have access to finance, and other basic entitlements for both men and women. Unfortunately, while some equality milestones have been reached, in many cases attainment is a distant goal. Take the case of ‘Justice’. “In many countries of the world the rule of law still rules women out,” says the latest UN Report ‘Progress of the Worlds Women – In Pursuit of Justice’. The report, released today, highlights women’s access to justice systems in almost every country in the world. It focuses on issues such as number of seats held by women in their country’s parliament, laws against domestic violence, and so on. “The Paradox confronted by the report is that despite the recent and rapid expansion of women’s legal entitlements, what is written in the statute books does not always translate into real progress on equality and justice on the ground,” says Claire Provost in a post on the Guardian’s Poverty Matters blog. The report also has a wealth of data; see the interactive map here.