The Future of Manufacturing Industry and Its Implications for Developing Countries

Abstract

Industrialisation has long been synonymous with economic progress and structural change. A controversial aspect of industrialisation is the role of industrial policy in supporting this process. This chapter examines the role of industrial policy, particularly in low- and lower-middle-income economies, in the current economic environment by focussing on three mega-trends—the fragmentation of production based around production value-chains, technological breakthroughs leading to production based on digital technology or ‘smart production’ and moves towards the greening of industrial development. The basic message is that industrial policy in its ‘modern’ version is highly relevant for today’s high-income economies, but for low-income and lower-middle-income economies that are technology importers not innovators, there is scope for industrial policy to play a more traditional role.