From manufacturing-led export growth to a twenty-first century inclusive growth strategy: Explaining the demise of a successful growth model and what to do about it

Abstract

Success in economic development over the past half-century was based on manufacturing-led export growth. Because the share of global employment in manufacturing is set to continue to decline, manufacturing will not play the same role in the future. The author deconstructs what enabled manufacturing to generate growth and structural transformation. The strategy proposed is multi-pronged, addressing separately, in different sectors, the challenges of learning, foreign exchange, and employment. A carefully designed, coordinated multi-sector strategy, with sectoral policies in agriculture, natural resources, manufacturing, and especially services, has the prospect of attaining the same success as the old manufacturing-led export strategy. To implement it, countries will require active industrial policies based on a new understanding of dynamic comparative advantage. The creation of a global reserve system could help provide the finance required for success. New development strategies will require greater balance among the market, state, and community-a perspective articulated in the Stockholm Statement.