Trouble in the Making? The Future of Manufacturing-Led Development
Speakers: Mary Hallward-Driemeier and Gaurav Nayyar
Technology and globalization are threatening manufacturing’s traditional ability to deliver both productivity and jobs at a large scale for unskilled workers. Concerns about widening inequality within and across countries are raising questions about whether interventions are needed and how effective they could be. Trouble in the Making? The Future of Manufacturing-Led Development addresses three questions:
- How has the global manufacturing landscape changed and why does this matter for development opportunities?
- How are emerging trends in technology and globalization likely to shape the feasibility and desirability of manufacturing-led development in the future?
- If low wages are going to be less important in defining competitiveness, how can less industrialized countries make the most of new opportunities that shifting technologies and globalization patterns may bring?
The book examines the impacts of new technologies (i.e., the Internet of Things, 3-D printing, and advanced robotics), rising international competition, and increased servicification on manufacturing productivity and employment. The aim is to inform policy choices for countries currently producing and for those seeking to enter new manufacturing markets. Increased polarization is a risk, but the book analyzes ways to go beyond focusing on potential disruptions to position workers, firms, and locations for new opportunities.
The Innovation Paradox
Speaker: William F. Maloney
Co-author: Xavier Cirera
Since Schumpeter, economists have argued that vast productivity gains can be achieved by investing in innovation and technological catch-up. Yet, as this volume documents, developing country firms and governments invest little to realize this potential, which dwarfs international aid flows. Using new data and original analytics, the authors uncover the key to this innovation paradox in the lack of complementary physical and human capital factors, particularly firm managerial capabilities, that are needed to reap the returns to innovation investments. Hence, countries need to rebalance policy away from R&D-centered initiatives—which are likely to fail in the absence of sophisticated private sector partners—and toward building firm capabilities; and they need to embrace an expanded concept of the National Innovation System that incorporates a broader range of market and systemic failures. The authors offer guidance on how to navigate the resulting innovation policy dilemma: as the need to redress these additional failures increases with distance from the frontier, government capabilities to formulate and implement the policy mix become weaker. This book is the first volume of the World Bank Productivity Project, which seeks to bring frontier thinking on the measurement and determinants of productivity to global policy makers.