Structural Transformation and Manufacturing Opportunities

Nobuya Haraguchi20 February 2015

1

Outline

• Structural change and role of manufacturing in the economy

• Structural change within manufacturing and opportunities for low and high income countries

• Global production network

2

3

Rodrik, 2014 Ghani and O’Connell, 2014

4

5

6

7

(86 countries)

Source: UNIDO

8

Developing countries have had higher growth in manufacturing than in GDP for 31 years out of 43 years.

9

Value added share

Source: UNIDO

10

Value added share

Source: UNIDO

11

Value added share

Source: UNIDO

Low income countries

12

13

Patterns of Manufacturing Development

Source: UNIDO

Source: UNIDO

Change in value added per capita by income, low- and lower-middle incomes

Food and beverage

Textiles

Chemical

Electrical machinery and apparatus

Motor vehicles

Fabricated metals

Basic metals

Wearing apparel

Rubber and plastics

Machinery and equipment

Employment

Source: Estimated based on UNIDO INDSTAT2

Food and tobacco

Textiles and leather

Energy intensity of Manufacturing Industries

Ton

ns

of

oil

equ

ival

ent

/ US

$ 1,

000

MV

A

Metals

Non-metallic minerals

Textiles Wearing Apparel Coke and Petro

Machinery and Equip. Electrical Mach. and Equip. Motor Vehicles.

18

Wearing apparel

Changes in value added and labour productivity

Textiles

$9,000$18,000

$10,000$14,500

$13,000 $17,000

Basic metals Electrical Machinery and Apparatus

$35,000

Changes in value added and labour productivity

High income countries

20

Start growing slower than the economy-wide average

(Large countries)

Source: UNIDO

Food and beverage

Textiles

Chemical

Electrical machinery and apparatus

Motor vehicles

Fabricated metals

Basic metals

Wearing apparel

Rubber and plastics

Machinery and equipment

Employment

Source: Estimated based on UNIDO INDSTAT2

Source: Own elaboration based on WIOD

Source: Own elaboration based on WIOD

25

Source: Own elaboration based on WIOD

26

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Other Services

Business Services

Transport

Wholesale

Manufacturing

Manufacturing-related employment in Germany(in 1,000)

Source: Own elaboration based on WIOD

N.A.91%

W.E.91%

E.A.88%

Final outputsTextiles and Wearing Apparel,

1990

Total of the three regions72%

+S. America and S.E. Asia84%

2.5%1.9%

3.6%

4.1%3.4%

2.0%

90%

81%

E.A.86%

W.E.83%

N.A.84%

Total of the three regions68%

+S. America and S.E. Asia86%

Final outputsTextiles and Wearing Apparel,

2011

81%

88%

4.4%5.4%

2.1%

4.8%

2.2%

4.6%

E.A.90%

Total of the three regions84%

Final outputsElectrical and Machinery,

1990

N.A.91%

W.E.91%

3.3%3.9%

2.9%

2.9%

3.9%

3.2%

E.A.83%

Total of the three regions80%

Final outputsElectrical and Machinery, 2011

N.A.84%

W.E.85%

5.8%5.4%

3.2%

5.1%

3.2%

5.8%

Total of the three regions68%

+ S.E. Asia 78%

Value AddedTextiles and Wearing Apparel,

2011

73%

70%

51%

79%

92%

77%

14%

11%

28%

90%83%

79%

Total of the three regions77%

Value AddedElectrical and machinery, 2011

N.A.93%

W.E.80%

E.A.77%

72%

67%

57%

77%

85%

69%11%

14%

17%

25%

88%84%

81%

Total of the three regions81%

Value AddedTransport equipment, 2011

N.A.93%

W.E.80%

E.A.77%

38%

64%

69%

72%

80%

64%

11%

10%

39%

10%

13%

16%

10%74%

93%

80%

11%

1990 2011Italy

0%10%20%30%40%50%60%70%80%90%

100%

14% 20%3%

9%

79%67%

1990 2011Spain

17% 19%

3%8%

77%68%

1990 2011South Korea

7% 8%5% 5%

12%22%1%

2%

73%62%

1990 2011Mexico

6% 9%17% 16%3%

9%

73%62%

Mexico

Oceania

Asia

Africa

NAFTA

EUROPE

1990 2011China

0%10%20%30%40%50%60%70%80%90%

100%

3% 4%4% 7%

90% 86%

1990 2011India

2%6%

94%86%

1990 2011Bangladesh

5% 9%

92% 88%

1990 2011Indonesia

6% 4%

10% 11%

77% 80%

Textiles and wearing apparel

Electrical and machinery

1990 2011Germany

11% 16%3%

7%

83%73%

1990 2011France

0%10%20%30%40%50%60%70%80%90%

100%

18% 19%

4% 7%

75% 70%

1990 2011South Korea

9% 10%7% 6%

18%29%

66%53%

1990 2011Singapore

20% 16%

15%9%

39% 49%

24% 23% Singapore

Oceania

Africa

Central, South America and the Caribbean

NAFTA

EUROPE

1990 2011Japan

0%10%20%30%40%50%60%70%80%90%

100%

2% 7%

91% 85%

1990 2011USA

4% 6%3%

7%

91%82%

1990 2011China

4% 8%5%

12%

88%74%

1990 2011Germany

0%10%20%30%40%50%60%70%80%90%

100%

18% 25%

3%7%

75%63%

1990 2011Italy

19% 27%2%

3%2%

7%

75%62%

1990 2011South Korea

8% 10%6% 5%

13%19%

72% 64%

1990 2011Mexico

6% 9%

19% 17%4% 9%

70% 62%

Mexico

Oceania

Asia

Africa

NAFTA

EUROPE

1990 2011Japan

0%10%20%30%40%50%60%70%80%90%

100%

2% 7%

91% 86%

1990 2011China

3% 7%4%8%

91%79%

1990 2011India

4% 9%2%8%

92%79%

1990 2011USA

6% 7%3% 5%4%9%

86%76%

Transport equipment