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Industrial Development Report 2009 Breaking in and Moving Up: New Industrial Challenges for the Bottom Billion and the Middle-Income Countries

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Industrial Development Report 2009 Breaking in and Moving Up: New Industrial Challenges for the Bottom Billion and the Middle-Income Countries Industrial Development Report 2009 Breaking In and Moving Up: New Industrial Challenges for the Bottom Billion and the Middle-Income Countries UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Industrial Development Report 2009 Breaking In and Moving Up: New Industrial Challenges for the Bottom Billion and the Middle-Income Countries Copyright © 2009 United Nations Industrial Development Organization The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Designations such as “developed”,“industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgement about the state reached by a particular country or area in the development process. The mention of firm names or commercial products does not imply endorsement by UNIDO. Material in this publication may be freely quoted or reprinted, but acknowledgement is requested, together with a copy of the publication containing the quotation or reprint. UNIDO ID No.: 438 UN Sales No.: E.09.II.B.37 ISBN: 978-92-1-106445-2 ii UNIDO Industrial Development Report 2009 Contents Page Page Foreword vii 4. Understanding structural change: Acknowledgements ix The growing role of manufactured exports 39 Explanatory notes xi Overview xiii 4.1. Manufactured exports and the developing countries 39 4.2. Export sophistication, structural change and growth 45 Part A 4.3. Trade in tasks 49 4.4. Conclusions 52 Industrial structural change and new challenges: The policy space for breaking in and moving up 1 5. Implications for industrial development 55 5.1. Room at the bottom? 55 Section I 3 5.2. Pressure in the middle 59 Structural changes in industry and the global economy 5.3. Conclusions 62 1. Introduction 3 Section III 65 1.1. Industrialization, structural change and growth 4 What policies are appropriate? 1.2. Is industrialization development-friendly? 6 1.3. Industrial development and the bottom billion 9 6. Industrial and trade policies for manufacturing in developing countries 65 Section II 11 Global structural change: 6.1. Infrastructure for industry and trade 65 Implications for industrial development 6.2. Supporting industrial agglomerations 71 6.3. Regional policies 76 2. Understanding structural change: 6.4. Conclusions 78 Products, tasks and natural resources 11 7. Industrial and trade policies for resource-rich countries 81 2.1. What you make matters 11 2.2. Industrial sophistication, structure and growth 13 7.1. Managing the resource-extraction industry 81 2.3. From products to tasks 18 7.2. Policies for knowledge services and construction 83 2.4. Resource extraction and industrial development 21 7.3. Policies for supporting manufacturing 85 2.5. Conclusions 24 7.4. Conclusions 86 3. Understanding structural change: 8. Policy imperatives for developed countries 89 The location of manufacturing production 27 8.1. Why promote industrialization in poor countries? 89 3.1. Agglomerations and industrial clusters 27 8.2. Trade policies to promote industrialization 3.2. Clusters and industrial development: 29 in developing countries 89 Evidence from ten industrial locations 8.3. Capacity-building for trade 91 3.3. Industrial clusters and externalities: 8.4. Reforming Aid for Trade 92 Some evidence from Chile, China and Malaysia 33 8.5. How developed countries can support 3.4. Cities and industrial development 35 transformative resource extraction 94 3.5. Conclusions 36 8.6. Conclusions 95 Content iii Page Page Part B Tables Part B The global manufacturing scene: 1.1. Fast- and slow-growing low- and middle-income A review of trends in industry and trade performance 97 countries, 1975-2005 5 9. Manufacturing value added and employment 99 3.1. Econometric evidence on industrial clusters and firm performance 28 3.2. Selected dynamic industrial locations, 2000-2006 30 9.1. Manufacturing and the developing economies: At a watershed? 99 9.2. Structure of global manufacturing employment 105 4.1. Share of imported intermediates for domestic sale and export, 1986-2000 52 10. Manufactured exports and the developing countries 111 6.1. Logistics performance index, 2007 69 6.2. Export processing zones, selected years 73 10.1. Manufactured export growth between 1990 and 2005 111 9.1. Manufacturing value added share within developing 10.2. Developing countries are increasingly exporting manufactures 113 country groups of selected countries, 2000 and 2005 99 10.3. South-South trade is growing 114 9.2. Manufacturing value added, and average annual growth rate, by country group and region, 2000-2005 100 10.4.East Asia dominates developing country trade in manufactures 115 9.3. Technology composition of manufacturing value added share, 1993-2003, selected years 101 9.4. Top five countries in the fastest-growing manufacturing 11.Benchmarking industrial performance at the country level: sectors, 2000 and 2006 103 The UNIDO competitive industrial performance index 117 9.5. Contribution of the five largest developing economies to manufacturing value added in developing economies, 11.1. Ranking countries by the competitive industrial 1995 and 2000-2005 104 performance index 117 9.6. Manufacturing value added in least developed 11.2. Competitive industrial performance by region 119 countries 105 9.7. Within-country share of employment in manufacturing, Annexes mean values before and after 1985 107 I. Classification of country groups 123 9.8. Global share of sectoral employment in manufacturing, II. Statistical notes and tables 127 mean values before and after 1985 108 References 139 10.1. World trade by main category, 2000-2005 111 10.2. World’s 20 most dynamic manufactured exports above $20 billion, 1995-2000 112 10.3.World’s 20 most dynamic manufactured exports above $20 billion, 2000-2005 113 10.4.World trade in manufactures by country group and region, 2000-2005 113 11.1. Ranking of countries by the competitive industrial performance (CIP) index, 2000 and 2005 118 11.2. Ranking of countries by the competitive industrial performance (CIP) index, by developing region, 2000 and 2005 120 iv UNIDO Industrial Development Report 2009 Page Page Figures 5.1. Production intensity in five industrial sectors in China, 1980-2003 57 1.1. Association between growth in manufacturing 5.2. Production intensity in slow-growing middle-income value added and growth in gross domestic product, countries, 1970-2003 60 2000-2005 4 5.3. Production intensity in fast-growing middle-income countries, 1970-2003 60 2.1. Ranking of manufacturing activities by P-soph 5.4. Export intensity by product group in slow-growing indices, 1975-2000 14 middle-income countries, 1976-2003 61 2.2. Relationship between per capita income and 5.5. Export intensity by product group in fast-growing manufacturing sophistication, 1975-2000, selected years 15 middle-income countries, 1976-2003 61 2.3. Production intensity by level of sophistication 17 2.4. U-shaped specialization, industrial diversity and 6.1. Mean logistics performance index, country gross domestic product per capita 18 grouping and region, 2007 68 2.5. Sophistication of manufacturing by gross domestic product per capita 20 9.1. Share in developing country manufacturing value added 2.6. World oil price and the relative price of construction by selected developing countries, 1995, 2000 and 2005 101 in Nigeria, 1990-2006 23 9.2. Shares in world value added, by region and technology category, 1993-2003 102 3.1. Production stages, selected locations, 2006 30 9.3. Manufacturing value added, by region, 2000-2005 104 3.2. Export and employment growth, selected locations, 2000-2006 32 10.1. Share of primary and manufactured exports in total 3.3. Firm-level export intensity of output and skill intensity, exports, 1990-2005 111 selected locations, 2000-2006 32 10.2. Share of resource-based, low-, medium- and high- 3.4. Penang’s industrialization journey 34 technology exports in total manufactured exports, 1990-2005 112 4.1. a. Growth in manufactured exports, by region, 1991-2005 10.3. Annual growth rate of manufactured exports b. Sources of growth in manufactured exports, by region, by technology category, 1990-2005 112 1991-2005 41 10.4. Share of China, India, Mexico, South Africa and Turkey 4.2. a. Growth in textile exports, by region, 1991-2000 in their respective region’s manufactured exports, b.Sources of growth in textile exports, by region, 1995-2005, selected years 114 1991-2000 42 10.5. Average annual growth of manufactured exports by 4.3. a. Growth in apparel exports, by region, 1991-2000 technological category, 2000-2005 114 b. Sources of growth in apparel exports, by region, 10.6. Market share of developing countries in all categories 1991-2000 42 of manufactured exports, 2000-2005 114 4.4. a. Growth in machinery and equipment exports, 10.7. Trade patterns between the North and South: by region, 1991-2000 World market share, annual growth rates and export b. Sources of growth in machinery and equipment values, 2000-2005 115 exports, by region, 1991-2000 43 10.8. Share in South-South trade in manufactures by 4.5. a. Growth in electrical machinery exports, technological category, 1995 and 2000-2005 115 by region, 1991-2000 b. Sources of growth in electrical machinery exports, 10.9. Gains in manufactured exports of East Asia, 2000-2005 115 by region, 1991-2000 43 10.10.Trends in South-South trade in manufactures, including 4.6. Ranking of manufacturing activities by export and excluding East Asia and the Pacific, 1995 and sophistication indices, 1975-2000 46 2000-2005 115 4.7. Relationship between per capita income and export 10.11. Evolution in trade structures by developing region, sophistication, 1976-2003, selected years 47 2000 and 2005 116 4.8.
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