The manufacturing question

There are some truths in economics that go virtually unchallenged. One of them happens to be how countries move from being developing countries to becoming developed countries. As Ruchir Sharma writes in The Rise and Fall of Nations: Ten Rules of Change in the Post-Crisis World, "The early steps have always involved manufacturing goods for sale to foreigners, not to locals. In a study of 150 emerging nations looking back fifty years, the Emerging Advisors Group, a Hong Kong-based economic research firm, found that the single-most powerful driver of economic booms was sustained growth in exports, especially in manufacturing." Hence, manufacturing exports are basically what has helped countries move out of poverty over the last 50 years. And this includes a whole host of countries in South East Asia as well as countries like Japan, Taiwan, South Korea and China. In fact, success at manufacturing exports came to these countries because of an industrial revolution. As Dani Rodrik writes in a research paper titled 'Premature Deindustrialisation', "It was the industrial revolution that enabled sustained productivity growth in Europe and the United States for the first time, resulting in the division of the world economy into rich and poor nations. It was industrialisation again that permitted catch-up and convergence with the W

This article was originally published on March 03, 2017.