Is Industrialization Still A Useful Strategy For Developing Nations?

Last month, the Economist had an article titled “Arrested development: The model of development through industrialisation is on its way out” – well worth reading.

It started by describing how China successfully followed the previous model of industrialization by Japan and South Korea, among others.  In turn, many other emerging economies are now planning to follow the same road as China did – initiate a wealth-creating manufacturing sector that can export to the world.

However, the Economist offered a cautionary note about this strategy:

Governments across the emerging world dream of repeating China’s success, but the technological transformation now under way appears to be permanently changing the economics of development. China may be among the last economies to be able to ride industrialisation to middle-income status. Much of the emerging world is facing a problem that Dani Rodrik, of the Institute for Advanced Study in Princeton, New Jersey, calls “premature deindustrialisation”…

For most of recent economic history, “industrialised” meant rich. And indeed most countries that were highly industrialised were rich, and were rich because they were industrialised. Yet this relationship has broken down.

The article went on to point out that:

Another mechanism through which new technology is changing the process of development is the dematerialisation of economic activity. Consumption the world over is shifting from “stuff to fluff”


The Economist article, however, was not complete.  While it noted the impact of robots who can work cheaper than humans anywhere, it didn’t address the role 3D printing will have on manufacturing.

In my presentations to mayors of North American cities, I’ve emphasized that they cannot base their future on an old industrial era model of the economy.  The same is true for countries which haven’t industrialized yet.  In a global economy, even with vastly unequal positions of different nations, the same rules of the game apply. 

I won’t repeat here the themes of my other blog posts, but, to get into that game, communications and information technologies (ICT) are a requirement.

Of course, it is frequently argued that ICT has to take a back seat when a nation doesn’t have clean water, etc.  I understand this argument and sympathize to a degree, but I’d also note that in fact in many poor countries there are more people with mobile phones and access to the Internet than access to a bathroom.  Maybe they understand that you need, to use an old analogy, to spend some money to drain the swamp or you’ll forever be stuck fighting the alligators.

For them, ICT is a path out of poverty.  And, of course, from a public sector viewpoint, ICT can also help to manage and implement cleaner living conditions, sewer systems, etc.

The ultimately pessimistic view of the Economist article may not be justified, since these new rules and approaches to economic growth are beginning to be understood by a number of leaders in developing nations.  By ICT investments, experimentation and innovation, they are also beginning to create the new post-industrial template for growth.

© 2014 Norman Jacknis