Patterns of Technical Change and De-Industrialization

Luis Villanueva, Xiao Jiang

Abstract


Using a classical political economy approach we find aggregate regularities in the patterns of technical change followed by high income and developing countries (mostly from Latin America and Sub Saharan Africa) respectively. Such regularities allow us to propose an alternative definition of de-industrialization and study the issue of “premature de-industrialization” from a political economy perspective. In the (capital productivity, labor productivity) plane, a characteristic trajectory of high-income countries typically fluctuates in the quadrant where labor productivity growth rates are positive while capital productivity growth rates are negative (the industrialization quadrant). De-industrializing countries, on the other hand, have transitioned from the quadrant with positive labor productivity growth rates and negative capital productivity growth rates to the opposite quadrant (with negative labor productivity and positive capital productivity growth) and remained in this quadrant during the 1980s and 1990s. Both groups of countries, high income and de-industrializing seem to follow a cyclical pattern, revealing that the rate of industrialization is constantly fluctuating with varying labor and capital productivity growth rates.

JEL codes: B12, O33, O47


Keywords


patterns of technical change, de-industrialization, Classical Political Economy, labor productivity, capital productivity

Full Text:

PDF

References


Alonso J.A., Cortez A.L. and Klasen S. (2014), “LDC and Other Country Groupings: How Useful Are Current Approaches to Classify Countries in a More Heterogeneous Developing World?”, CDP Background Paper, no. 21, New York: Committee for Development Policy, UN Department of Economic and Social Affairs, available at: https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2014-21.pdf

Berry A. (2008), “Dutch Disease: A Threat to Latin America’s Current Growth Spurt?”, FOCAL Point, 7 (2), Special Edition on Energy, pp. 6-8.

Berthélemy J.-C., Kauffmann C., Valfort M.A. and Wegner L. (eds.) (2004), Privatisation in Sub-Saharan Africa: Where Do We Stand?, Paris: Development Centre Studies, OECD.

Cardenas E., Ocampo J.A. and Thorp R. (2000), An Economic History of Twenty Century Latin America, vol. 3, New York: Palgrave.

Chang H. (2008), Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, New York: Bloomsbury Press.

Cohen A.J. and Harcourt G.C. (2003), “Whatever Happened to the Cambridge Capital Theory Controversies”, Journal of Economic Perspectives, 17 (1), pp. 199-214.

Corden W.M. (1984), “Booming Sector and Dutch Disease Economics: Survey and Consolidation”, Oxford Economic Papers, 36 (3), pp. 359-380.

Cornia J.A. (2012), “Inequality Trends and Their Determinants: Latin America over 1990-2010”, UNU-WIDER Working Paper, no. 2012/09, Helsinki: United Nations University and World Institute for Development Economics Research.

Dasgupta S. and Singh A. (2006), “Manufacturing, Services and Premature Deindustrialization in Developing Countries: A Kaldorian Analysis”, UNU-WIDER Working Paper, no. 2006/49, Helsinki: United Nations University and World Institute for Development Economics Research.

Fantom N. and Serajuddin U. (2016), “The World Bank’s Classification of Countries by Income”, Policy Research Working Paper Series, no. 7528, Washington, DC: World Bank.

Ferretti F. (2008), “Patterns of Technical Change: A Geometrical Analysis Using the Wage-Profit Rate Schedule”, International Review of Applied Economics, 22 (5), pp. 565-583.

Fialho D. and Van Bergeijk P. (2017), “The Proliferation of Developing Country Classifications”, The Journal of Development Studies, 53 (1), pp. 99-115.

Foley D.D. and Marquetti A. (1997), “Economic Growth from a Classical Perspective”, in Teixeira J. (ed.), Proceedings: International Colloquium on Money, Growth, Distribution and Structural Change: Contemporaneous Analysis, Brasilia: Editora Universidade de Brasília.

Foley D.K. and Marquetti A. (1999), “Productivity, Employment and Growth in European Integration”, Metroeconomica, 50 (3), pp. 277-300.

Foley D.K. and Michl T. (1999), Growth and Distribution, Cambridge (MA): Harvard University Press.

Gasparini L., Cruces G. and Tornarolli L. (2011), “Recent Trends in Income Inequality in Latin America”, Economía, 11 (2), pp. 147-190.

Goodwin R. (1967), “A Growth Cycle”, in Feinstein C.H. (ed.), Socialism, Capitalism, and Economic Growth (pp. 54-58), Cambridge (UK): Cambridge University Press.

Kaldor N. (1966), Causes of the Slow Rate of Economic Growth in the United Kingdom, Inaugural Lecture at the University of Cambridge, Cambridge (UK): Cambridge University Press.

Lartey E. (2011), “Financial Openness and the Dutch Disease”, Review of Development Economics, 15 (3), pp. 556-568.

Lora E., Panizza U., Herrera A.M. and Pérez N. (2002), “The future of reforms”, Latin American Economic Policies, 17 (1), pp. 1-8.

Marquetti A. (2002), “Progresso técnico, distribuição e crescimento na economia brasileira: 1955-1998”, Estudos econômicos, 32 (1), pp. 103-124.

Marquetti A. and Soares P.M. (2014), “Patterns of Technical Progress in the Brazilian Economy, 1952-2008”, CEPAL Review, 113, pp. 57-73.

McMillan M., Rodrik D. and Verduzco-Gallo Í. (2014), “Globalization, Structural Change, and Productivity Growth, with an Update on Africa”, World Development, 63, pp. 11-32.

McMillan M. and Rodrik D. (2011), “Globalization, Structural Change, and Economic Growth”, in Bacchetta M. and Jansen M. (eds.), Making Globalization Socially Sustainable (pp. 36-70), Geneva: International Labor Organization and World Trade Organization.

Nielsen L. (2013), “How to Classify Countries Based on Their Level of Development”, Social Indicators Research, 114 (3), pp. 1087-1107.

Ocampo J.A. and Bertola L. (2012), Economic Development of Latin America since Independence, Oxford: Oxford University Press.

Ochoa E. (1989), “Values, Prices, and Wage-Profit Curves in the US Economy”, Cambridge Journal of Economics, 13 (3), pp. 413-429.

Portes A. and Hoffman K. (2003), “Latin American Class Structures: Their Composition and Change during the Neoliberal Era”, Latin American Research Review, 38 (1), pp. 41-82.

Rodrik D. (2016), “Premature deindustrialization”, Journal of Economic Growth, 21 (1), pp. 1-33.

Rodrik D. (2011), The Globalization Paradox: Why Global Markets, States, and Democracy Can’t Coexist, Oxford: Oxford University Press.

Sachs J.D. and Warner A.M. (1999), “The Big Push, Natural Resource Booms and Growth”, Journal of Development Economics, 59 (1), pp. 43-76.

Saeger S. (1997), “Globalization and Deindustrialization: Myth and Reality in the OECD”, Review of World Economics, 133 (4), pp. 579-608.

Schefold B. (2008), “Families of Strongly Curved and of Nearly Linear Wage Curves: A Contribution to the Debate about the Surrogate Production Function”, Bulletin of Political Economy, 2 (1), pp. 1-24.

Sen A. (1999), Development As Freedom, New York: Random House.

Shafeeddin S.M. (2005), “Trade Liberalization and Economic Reform in Developing countries: Structural Change or De-Industrialization?” UNCTAD Discussion Papers, no. 179, Geneva: United Nations Conference on Trade and Development.

Sraffa P. (1960), Production of Commodities by Means of Commodities, Cambridge (UK): Cambridge University Press.

Tezanos Vázquez S. and Sumner A. (2013), “Revisiting the Meaning of Development: A Multidimensional Taxonomy of Developing Countries”, Journal of Development Studies, 49 (12), pp. 1728-1745.

Tregenna F. (2014), “A New Theoretical Analysis of Deindustrialization”, Cambridge Journal of Economics, 38 (6), pp. 1373-1390.




DOI: https://doi.org/10.13133/2037-3643_71.285_4

Refbacks

  • There are currently no refbacks.


Copyright (c) 2018 Luis Villanueva

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

 

 

Sponsored by   


ISSN 2037-3643


Reg. Tribunale di Roma n.377/2009 del 19/11/2009