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  • Print publication year: 2010
  • Online publication date: March 2012

Chapter 9 - Structural Transformation, Industrialization, and Technological Change in Developing Asia: What Does the Empirical Evidence Show?

Summary

Progress is impossible without change, and those who cannot change their minds cannot change anything.

—George Bernard Shaw

I argued in chapter 6 that a key policy to achieve full employment is to spend on investment to increase the investment-to-output ratio. This has been the basis for the policy of industrialization followed by a number of successful East and Southeast Asian economies, including the People's Republic of China (PRC). The result is that the expansion of the manufacturing sector has been the catalytic force underlying the economic transformation that East and Southeast Asia has undergone during the last three decades. As the Asian Development Bank (ADB 2007b), Felipe and Estrada (2008), and Felipe et al. (2007) document, the newly industrialized economies (NIEs), Malaysia, Thailand, Indonesia, and the PRC, have seen their economies transform in the direction of industrialization. And the structures of output and exports have changed in the direction of a higher sophistication, e.g., larger shares of electrical machinery and transport equipment. In this chapter, I provide an in-depth empirical analysis of the transformation of developing Asia's manufacturing sector. Box 9.1 presents the empirical regularities that recent research on the patterns of economic growth has highlighted.

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