IPDJICA Task Force on Industrial Policy and Transformation Jordan June 56 2014 Nobuya Haraguchi Motivations To understand the process of industrial development To identify development patterns and structural change ID: 916997
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Slide1
Patterns of Industrialization and effects of country-specific conditions
IPD/JICA Task Force on Industrial Policy and Transformation
Jordan, June 5-6, 2014
Nobuya
Haraguchi
Slide2Motivations
To understand the process of industrial development
To identify development patterns and structural change
To find out the way in which country-specific conditions affect country’s industrial development
Slide3Studying development characteristics of manufacturing industries
Not only the patterns but also the development characteristics of manufacturing industries
Use of real value added per capita
Analysis on output (value added), employment and labor productivity together
Their changes as countries develop
Changes over time (time effects)
Slide4Patterns of Manufacturing Development
and
Shift of Comparative Advantage
Slide5Manufacturing development patterns
Slide6Model
RVA – real value added per capita
EMP – employment-population ratio
LP – labour productivity
RGDP
– real GDP
per
capita
(in constant PPP 2005)
RGDP
2 – real GDP per capita square, RGDP3 – real GDP per capita cubicαc – country fixed effect e – unexplained residuali – manufacturing industry (ISIC 2 digit level - 18 industries)Unbalanced panel data Time series from 1963 – 2010; 75-110 countries depending on the industryModel applied to large (with population more than 12.5 million) and small country groups separatelyIn addition, we assessed the effects of population density, natural resource endowment and time periods on industrial development.
Slide7Non-parametric approach for estimation
Slide8Source
: UNIDO estimate based on UNIDO INDSTAT2
Estimated pattern with actual country observations
Slide995% confidence intervals (after anti-log)
Source
: UNIDO estimate based on UNIDO INDSTAT2
Slide10Food and beverage
Textiles
Wearing apparel
Chemical
Electrical machinery and apparatus
Motor vehicles
Fabricated metals
Basic metals
Development patterns
Slide11Textiles
Wearing apparel
Food and beverage
Chemical
Electrical machinery and apparatus
Fabricated metals
Basic metals
Motor vehicles
Development patterns
Slide12Source
: UNIDO estimate based on UNIDO INDSTAT2
Changes in growth rates
Slide13EP
∆∆
∆∆
∆∆
∆∆
∆
∆
∆
∆
∆
∆
∆
∆
−
−
−−
−
−
−
−−
VA
++
++
++
++
++
+
+
+
+
+
+
+
+
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
LP
++
+
+
+
+
+
+
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
∆∆
EP
∆
∆
∆
∆
∆
−
−
−
−
− −
− −− −− −− − −− − −− − −− − −− − −− − −− − −− − −VA+++++++++++++∆∆∆∆∆∆∆∆∆∆∆∆−−−−LP++++++++++++++++++++++EP+++++++++++∆∆∆∆∆∆∆−−− −− −− −− − −− − −− − −− − −VA+++++++++++++++∆∆∆∆∆∆∆∆∆∆−−−−−−−LP−∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆∆
Food & beverage
Textiles
Wearing Apparel
e
≥
2 2
>
e ≥
1.5
1.5
> e ≥ 1
1 > e ≥ 0.5 0.5 > e ≥ 0
0 > e ≥ - 0.5 - 0.5 > e ≥ -1 -1> e
Wearing apparel
Food and beverage
Textiles
Food & beverages
Textiles
Wearing apparel
Slide146000
7000
8000
9000
10000
11000
12000
13000
14000
15000
16000
17000
1800019000
2000021000
22000
23000
24000
2500026000
EP
∆∆∆∆
∆∆
∆∆
∆∆
∆
∆
∆
∆
∆
∆
∆
∆
∆
∆
∆
∆
∆
−
−
−
VA
++
++
++
++
++
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
LP
∆∆
∆∆
+
+
+
+
+
+
+
+
+
+
+
++++++++EP+++∆∆∆∆∆∆∆∆∆∆∆−−−−− −− −− −− −− − −− − −− − −VA+++++++++++++++++++++++++++++++++++++++++++++++++++LP++++++++++++++++++++++++++++++++++++++++++++ e ≥ 2 2 > e ≥ 1.5 1.5 > e ≥ 11 > e ≥ 0.5 0.5 > e ≥ 0 0 > e ≥ - 0.5 - 0.5 > e ≥ -1 -1> eRubber plasticElectrical machineryRubber & plasticElectrical machineryElectrical machineryRubber & plastic
Slide15Effects of Country-Given Conditions
Slide16High Population Density
High Resource Endowments
strongly positive
Strongly Positive
Machinery
and equipment
Electrical
machinery and apparatus
Motor
vehicles
Chemicals
Rubber
and plastic
Non-metallic
minerals
Fabricated
metals
Food and beverages
Strongly Positive
Machinery
and equipment
strongly negative
Textiles
Paper
Wood
products
Wearing
apparel
Tobacco
Furniture
,
n.e.c
.
Strongly
Negative
Paper
Rubber
and plastic
Non-metallic
minerals
Printing
and publishing
Wood
products
Food
and beverages
Motor
vehicles
Basic
metals
Chemicals
Coke
and refined petroleum
Electrical
machinery and apparatus
Tobacco
Strongly Negative
Effects of Population Density and Resource Endowments
on manufacturing value added
Large countries
Source
: UNIDO estimate based on UNIDO INDSTAT2
Slide17Time Specific Effects
Slide18Emerging trends
.
.
.
.
Source
: UNIDO estimate based on UNIDO INDSTAT2
Textiles
Slide1970s
80-85
85-90
90-95
95-00
00-05
05-10
Tobacco
-
-
-
-
--
-
Textiles-
-
-
-
--
-
Wood products
-
-
-
-
-
-
-
Coke, refined petro
+
-
-
-
-
-
Chemical products
-
-
-
-
-
Non-metallic mineral
-
-
-
-
-
Basic metals
-
-
-
-
-
Fabricated metals
-
-
-
-
-
-
-
Machinery and equipment
+
+
-
-
--Electrical machinery++ ----Motor vehicles -----Furniture, nec ++++Emerging trends (Employment pattern)Source: UNIDO estimate based on UNIDO INDSTAT2
Slide2070s
80-85
85-90
90-95
95-00
00-05
05-10
Tobacco
+
-
-
--
-
Textiles+
--
-
Wearing apparel
+
-
-
-
Wood products
+
-
-
-
-
-
-
Paper
+
+
+
+
+
+
-
Chemical products
+
+
+
+
+
Rubber and plastic
+
+
+
+
+
+
Basic metals
+
+
+
+
+
Electrical machinery
+
+
+
+
+
-+Motor vehicles+++++- Emerging trends (Value added pattern)Source: UNIDO estimate based on UNIDO INDSTAT2
Slide21Emerging
characteristics of manufacturing industries since 1980
Emerging characteristics since 1980
Industry
Rising
Rubber and plastic
Declining
Tobacco
Textiles
Paper
Chemicals
Non-metallic
minerals
Intensifying capital use
Basic
metals
Fabricated
metals
Electrical
machinery and
apparatus
Motor
vehicles
Intensifying labour use
Furniture
Stable
Food
and
beverages Source: UNIDO’s elaboration based on CIC 2009; UNIDO Database (UNIDO 2012a).
Slide22Country-Specific
Effects
Slide23Country experiences
Source
: UNIDO estimate based on UNIDO INDSTAT2
Slide24Country experiences
Source
: UNIDO estimate based on UNIDO INDSTAT2
Slide25Country experiences
Source
: UNIDO estimate based on UNIDO INDSTAT2
Slide26Country specific effects
Source
: UNIDO estimate based on UNIDO INDSTAT2
Slide27Speed of manufacturing development
Industry
Republic of Korea
Malaysia
Sri Lanka
Food and beverages
4.74
1.46
0.64
Textiles
11.49
0.6
0.61Wearing apparel13.37
0.661.43
Chemicals
3.551.32
0.19
Basic metals3.62
0.38
0.03Fabricated metals
2.71
0.24
0.09
Electrical machinery and apparatus
7.53
0.78
0.1
Motor vehicles
5.28
0.4
0.13
Note: The speed is expressed as an increase in value added per capita divided by the number of years taken over the range of GDP per capita from US$ 3,000 to US$ 4,500
.
Source
: UNIDO calculations based on UNIDO INDSTAT2
Slide28Speed of structural change
Source
: UNIDO estimate based UNIDO INDSTAT2
Slide29$3,000
GDP per
capita (PPP)
Value added per
capita
$10,000
Comparative advantage
Country-specific
and
t
ime effects
Industry A
Industry B
Speed
Speed
Level deviation
Source
: UNIDO’s elaboration
Graphic representation of the role of comparative
advantage and
country-specific
and time effects
in manufacturing development