Premature deindustrialisation: the international evidence

Date

2023-07-01

Author

Özçelik, Emre
Özmen, Erdal

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We examine patterns and globalisation-related causes of premature deindustrialisation (PD) in recent decades, using a large panel of advanced, emerging and developing economies (AE, EME and DE). The results verify the existence of PD in EME and DE, except East Asian countries. African countries have been worst affected by PD. Globalisation-related determinants of PD vary across country groups. While trade openness leads to deindustrialisation in DE; it enhances 'dependent' industrialisation in Latin American countries and the 'factory economies' of East Asia, which have stronger linkages to global value chains. Financial openness fosters industrialisation in severely finance-constrained economies, whereas it brings about deindustrialisation in financially stronger ones. It is our contention that development possibilities can be expanded by aiming at more intense linkages to global value chains, but proactive industrial policies at the levels of EME and DE are required to achieve such expansion.

Subject Keywords

Developing economies, Emerging market economies, Global value chains, Industrial policy, Premature deindustrialisation

URI

https://www.scopus.com/inward/record.uri?partnerID=HzOxMe3b&scp=85171878919&origin=inward
https://hdl.handle.net/11511/105816

Collections

Department of Economics, Article