Asia’s Industrial Transformation: The Role of Manufacturing and Global Value Chains (Part 1)
Abstract
Description
The single most important factor that explains East Asia’s development success was its fast structural transformation toward industrialization, manufacturing in particular.
Workers moved out of agriculture into manufacturing, and the sector diversified and upgraded its structure. Manufacturing activities are subject to increasing returns to scale, and many manufacturing goods have high income elasticities of demand. As a consequence, the sector is referred to as the “engine of growth.” This first part documents the extent of structural transformation in developing Asia and analyzes the relationship between the export-led growth model and industrialization. It also reviews the industrialization experiences of Japan and the Republic of Korea.