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Structural transformation and the evolution to higher productivity and living standards. Duncan Campbell Director , Global Mega -Trends Team Research Department ILO. Some definitions , some received wisdom. A few definitions.

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structural transformation and the evolution to higher productivity and living standards

Structural transformation and the evolution to higherproductivity and living standards

Duncan Campbell

Director, Global Mega-Trends Team

ResearchDepartment

ILO

a few definitions
A few definitions
  • using World Bank groupingsbased on GNI per capita, i.e. lowincome, middle-lowincome, middle-highincome, highincome. a labour market discussion of eachiswarranted !
  • « emerging », as defined by Antoine van Agtmael (IFC)
    • Embarked on economicdevelopment and reforms
    • Have begun to open theirmarkets and « emerge »
    • Fast-growingeconomies, in relative terms
first the lewisian basics
First, the Lewisian basics
  • Developmentoccursthrough inter-sectoral change – from agriculture to light industry, to more advancedindustry, and the growth of services
  • The inter-sectoral shift yieldseconomies of scaleunavailable in traditional agriculture
  • This in turnresults in higherincomesthat inter alia fuel the growth of services
the decomposition of services
The decomposition of services
  • Manufacturinghadembodied services that have been beenoutsourced (e.g. custodial or restaurant services)
  • Thus, in causal terms, manufacturingcreates services initially … but the causalityis dual
  • Many services are local – a point to whichwe return
  • And many services are tradeable, thus not unlikemanufacturing
let s take a look at what is happening empirically
Let’stake a look atwhatis happening empirically
  • Yes, developmenttheory has an empiricalfoundation, particularly in Asia
  • No, itis not capturing all of inter-sectoral change dynamics
slide9

a first distinction between « employment-led » and « growth-led » demand for labourmucheconomicactivity in developing countries is the search for demandcreationratherthandemandderivedfromproductmarkets

regional economic and labour market prospects east asia
Regional economic and labour market prospectsEast Asia
  • ...as the economies in the region become more mature
  • Sharp increase in unemployment expected in the region from earlier low levels...

Regional economic and labour market prospects

a couple of upshots
A couple of upshots
  • Agriculture declines as share of GDP output, but much less as share of employment
  • Industrialization stymied in many countries (e.g. Philippines)
  • Industrialization when it occurs is capital intensive and less labor absorbing
a typology of status in employment
a typology of status in employment

paidemploymentis a developed-country phenomenon, exceptatitslowest end (casualwage labour by the rural landless)

self-employment, with a significantsharebeing « survivalist » is a developing-country phenomenon

variousforms of unpaidwork, and non-marketwork, are developing-country characteristics

why the view from ilo and molisa in 2010
Why? The viewfrom ILO and MOLISA in 2010
  • The pace of restructuringistoo slow, from rural to urban, from agriculture to manufacturing, from public to private
  • Growth has been capital accumulation withlittle innovation … and capital intensive
  • Demographics: a population surgecoincidingwith a shortage of skilledlabor
  • Consideralsoexogenousconstraints to productivitygrowth
what in conclusion seems to matter
What, in conclusion, seems to matter?

«no country has made the arduousjourneyfromwidespread rural poverty to post-industrialwealthwithoutemployingtargeted and selectivegovernmentpolicies to modifyitseconomic structure and boostitseconomicdynamism.»

In short, vertical and horizontal industrialpolicies

so what matters is
So, whatmattersis….
  • Investment
  • Innovation
  • Capabilities
  • Productivity
  • Protection
  • And a pro-active state
thank you
Thank you!

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