Eighteenth-century Great Britain was the first country that underwent a process of manufacturing develop-ment. Only in the early nineteenth-century (after Great Britain had already achieved significant increases in productivity) did European countries such as Belgium, Switzerland and France, followed by the United States, enter their own different paths of manufacturing development. Subsequently, other latecomers (most notably Germany, Russia and Japan) joined the group of industrializing nations, while the developing world (both former colonies and non-colonies) remained oriented towards primary production (Gerschen-kron, 1962; Maddison, 2007). This situation basically remained unchanged until World War II (with the exception of Argentina, Brazil and South Africa). This group took the opportunity to initiate its own manufacturing development process through import substitution because of the contraction of world trade during the Great Depression (1930s). After World War II, more countries began to enter the ‘catch-up phase’ thanks to the increasing advantages of backwardness, the greater opportunities for technology transfer and the industrial policies implemented by developing states. This allowed them to enter the global manu-facturing development race(Wade, 1990; Chang, 1994, 2002; Amsden, 2001, 2007; Chang, Andreoni and Kuan, 2013).
At first glance, three sets of stylized facts emerge as characteristic features of the last half of the twentieth century. Let us start from the most apparent stylized fact: a global process of structural change and quan-titative redistribution of manufacturing across countries. With regard to the former, when the manufactur-ing development process became a major global phenomenon in 1950, manufacturmanufactur-ing constituted around 30 percent of GDP in advanced economies while that figure amounted to around 12 percent in developing countries (see Table 5 and Figure 1). The industrial sector taken as a whole (including manufacturing) accounted for 20 percent of GDP, while agriculture as well as services made up 40 percent of GDP in developing countries.
Among the economies in the ‘catch-up phase’, Latin America remained the most industrialized region until 1975, when the manufacturing sector started contracting to the point that, in 2005, the share of manu-facturing in GDP had reverted to 1950s levels and Latin American countries reduced their share in world manufacturing value added. The development path followed by manufacturing industries in Africa was,
on average, almost flat, reaching its peak in 1990 and decreasing again to 11 percent (i.e. a return to figures seen in 1950). In contrast, manufacturing in many Asian economies continued to increase through-out the last half of the century with an impressive acceleration from 1965 to 1980. Finally, the manu-facturing share in the most advanced economies started decreasing in the late 1960s, from 30 percent to 18 percent on average in less than a decade(Maddison, 2007; Szirmai, 2012).
During the second half of the last century, several East Asian economies experienced a sustained catching up process responsible for the quantitative redistribution of world manufacturing value added share and world manufactures trade. By 2010, the three most successful economies in East Asia, namely China, the Republic of Korea and China, Taiwan Province taken together accounted for one fifth of world manufac-turing value added share and world manufactures trade.
Figure 1: Worldwide manufacturing development paths (changes in the shares of manufacturing in GDP at current prices per country groups over the period 1950 – 2005)
Source: Based on Szirmai, 2012.
The quantitative redistribution of manufacturing, from advanced economies to a number of fast growing countries, has also been accompanied by a qualitative transformation within countries’ manufacturing sec-tors. At different stages of development (measured in real GDP per capita, US dollars 2005), a country’s manufacturing sector is composed of different shares of resource-based, labour intensive and skill/capital intensive industries. A set of empirical regularities has been observed (see Figure 2):
• Up to US$ 2.000, a country’s manufacturing sector tends to be composed of almost 50 percent resource-based industries, 20 percent labour intensive industries and 30 percent skill/capital intensive industries;
• Between US$ 2.000 and US$ 8.000, the ratio of labour intensive and skill/capital intensive indus-tries tends to invert, while resource-based manufacturing indusBetween US$ 2.000 and US$ 8.000, the ratio of labour intensive and skill/capital intensive indus-tries remain unchanged;
• Finally, from US$ 8.000 onwards, there is a tendency for resource-based industries to become less prevalent while there is an increase in skill/capital intensive industries (such as machinery production, automotive or chemicals) and a strong reduction in labour intensive industries (such as textiles and apparel).
Figure 2: Qualitative transformations in the manufacturing sector (changes in the composition of total MVA for large economies)
Source: UNIDO, 2012a.
The third feature (as shown in Table 5) is that the degree of variance among manufacturing development paths is very high, with countries from the same regions or income groups experiencing completely dif-ferent forms of industrialization. For example, the group of today’s advanced economies includes two different groups of countries. On the one hand are those such as Germany and Japan that have maintained a strong manufacturing base and, on the other, there are those such as the United States and United Kingdom that have increasingly relied on services. The manufacturing development trajectories of large world economies such as China and India or Brazil are also very different. Table 5 provides information on the share of manufacturing in GDP at current prices over the period 1950 – 2005 for 90 countries.
Table 5: Worldwide manufacturing development, 1950 – 2005 (shares of manufacturing in GDP at current prices, 90 countries)
Table 5 (continued): Worldwide manufacturing development, 1950 – 2005 (shares of manufacturing in GDP at current prices, 90 countries)
Source: Szirmai, 2012.