Chapter 1: The role of manufacturing versus services in economic development
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In this chapter, the authors critically evaluate the contention that today’s economic development strategies need to focus more on developing services rather than manufacturing. They ground their discussion particularly in the context of developing countries. They conclude that while services have increased their potential for contributing to productivity growth and are more tradable than before, manufacturing remains the backbone of productivity growth and economic development. They show that economic development has hardly ever happened without industrialisation; manufacturing has a larger multiplier effect in the economy than services; the falling share of the manufacturing sector in gross domestic product in many countries is somewhat of an illusion; manufactured goods remain far more tradable than services; and that the supposed risk of automation of manufacturing jobs in developing countries is mostly hype without evidence.