Premature Deindustrialization in Developing Countries and Implications for Economic Growth

Abstract

The examination in this paper is with regard to developing countries, and with regard to deindustrialization in the output share of manufacturing (both at current and constant prices). The question is whether the falling output share of manufacturing across time in developing countries –whether it occurs due to the determinant trade openness? In that, is there a steady decline in manufacturing output share both at current and constant prices, and what are the potential reasons behind it. Certain aspects of deindustrialization in developing countries will be explored in this paper. The first examination is that – by using a select developing country group consisting of 98 countries, the relationship between manufacturing output shares at current and constant prices and the GDP per capita income will be examined to prove the inverted-U hypothesis. It will be followed with an analysis of the different determinants of deindustrialization and how those determinants behave with respect to developing countries.