Beyond the inverted-U curve:
desindustrialisation and the limits of industry’s contribution to development in high and middle income countries.
DOI:
https://doi.org/10.33834/bkr.v12i1.413Keywords:
Industry and Development, Structural change, Deindustrialization, High-income countries, Middle-income countriesAbstract
Based on the understanding of development as a process of accumulation and investment linked to technological progress and structural transformation, this paper analyzes the industry’s contribution to development in high-income countries (HICs) and middle-income countries (MICs) between 2000 and 2019. It reassesses the validity of the inverted-U hypothesis initially proposed by Rowthorn through an innovative approach: evaluating industrial sectors by technological intensity using structural productivity decomposition. The findings show that none of the empirical exercises confirmed the presence of an inverted-U relationship between productivity growth and per capita income levels, whether in HICs or MICs. The most recurrent patterns were: (i) a positive exponential relationship; and (ii) a traditional U-shaped curve. Therefore, the results indicate that the industry's contribution to development has not declined with increasing per capita income levels.
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