Industrialisation as an engine of growth in developing countries, 1950–2005

This paper examines the emergence of manufacturing in developing countries in the period 1950–2005. It presents new data on structural change in a sample of 67 developing countries and 21 advanced economies. The paper examines the theoretical and empirical evidence for the proposition that industrialisation acts as an engine of growth in developing countries and attempts to quantify different aspects of this debate. The statistical evidence is not completely straightforward. Manufacturing has been important for growth in developing countries, but not all expectations of the ‘engine of growth hypothesis’ are borne out by the data. The more general historical evidence provides more support for the industrialisation thesis.

Research highlights► We examine the emergence of manufacturing in developing countries since 1950. ► We examine the proposition that manufacturing acts as the engine of growth. ► We make use of a newly developed dataset on structural change. ► We conclude that manufacturing has been important for developing country growth. ► Not all expectations of the engine of growth hypothesis are borne out by the data.