IDR 2013 Sustaining Employment Growth: The Role of Manufacturing Structural Change

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2 International Conference Manufacturing Led Growth for Employment and Equality IDR 2013 Sustaining Employment Growth: The Role of Manufacturing Structural Change Nobuya Haraguchi UNIDO 21 st May 2014

3 What is the report about? Global long-term trends in industrial structural transformation and employment What drives manufacturing development and through it employment at different income levels Industrial policies to generate employment through industrial structural transformation in developing countries What role for the international community in helping bringing about industrial development.

4 Main Findings 4

5 Is manufacturing still an engine of growth and employment generation? 5

6 Annual Growth Rate of GDP per capita Engine of Growth? 8.0% 7.0% Economic growth and changes in the MVA share in GDP (selected regions and country groups, ) China 6.0% First-tier newly industrialized 5.0% economies Eastern Europe (1995- CIS ( ) 2007) 4.0% Southeast Asia 3.0% Central America and South Asia 2.0% the Caribbean Semi-industrialized Middle East and 1.0% countries Northern Africa Low- to middleincome Sub-saharan Africa 0.0% Latin America -1.0% 0.0% 1.0% 2.0% 3.0% Annual average growth in the share of Manufacturing VA in GDP Source: Adapted from UNDESA 2006a based on CIC 2009; World Bank 2013b. 6

7 Percent Engine of Growth? GDP composition by sectors, Republic of Korea( ) US$ 22,084 (2005 PPP) US$ 1,744 (2005 PPP) GDP Growth: 5.5% Manufacturing Non-manuf industries Agriculture Services Source: Adapted from Szirmai 2009; Szirmai et al. 2013, page 11. 7

8 Post Industrial Society? 8

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10 Million of people Post Industrial Society? 3,500 Figure 12. Total Labour Force, Total Employment, and Total Manufacturing Jobs, 1995 and ,000 3,041 2,880 2,500 2,454 2,330 2,000 1,500 1, % Labour Force Total Employment Total Manufacturing Jobs 16.3% of total labour force

11 Are jobs traveling away? 11

12 Where are the jobs going? Source: UNIDO s elaboration based on UNIDO Database and WIOD 12

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14 Manufacturing Jobs Geographical Distribution in 2009 Europe & Cent Asia, 73,518 North America, 23,106 Middle East & North Africa, 9,972 East Asia, 200,513 South Asia, 81,825 Sub-Saharan Africa, 20,771 TOTAL 471 million jobs Latin America, 58,217 Oceania, 2,319 Europe & Cent Asia North America South Asia Latin America East Asia Sub-Saharan Africa Middle East & North Africa Oceania Source: UNIDO, INDSTAT, WIOD and ILO

15 What is there in manufacturing for the least developed and lower middle income countries? 15

16 Change in value added per capita by income, low- and lower-middle incomes ( ) Source: UNIDO s elaboration based on CIC 2009; UNIDO Database. 16

17 Changes in employment by income and manufacturing industry ( ) Source: UNIDO s elaboration based on CIC 2009; UNIDO Database. 17

18 Middle income countries 18

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20 Changes in employment by income and manufacturing industry ( ) Source: UNIDO s elaboration based on CIC 2009; UNIDO Database. 20

21 Millions South Africa 30 MVA/GDP in %, Manufacturing / GDP 2.5 Manufacturing employment Source: UNIDO Formal manufacturing employment Informal manufacturing employment Interpolated informal 21

22 South Africa: real value added shares, ( ) Food and beverages Fabricated metals Machinery and equipment Motor vehicles Basic metals Furniture n.e.c. Coke and refined petroleum Non-metallic minerals Electrical machinery and apparatus Chemicals Wearing apparel Textiles Rubber and plastics Paper Publishing and printing Wood Precision instruments Tobacco 0% 5% 10% 15% 20% 25% Source: INDSTAT 22

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24 What s left for high-income countries? 24

25 Changes in value added per capita by income and manufacturing industry ( ) Source: UNIDO s elaboration based on CIC 2009; UNIDO Database. 25

26 Source: Own elaboration based on WIOD

27 Source: Own elaboration based on WIOD

28 Source: Own elaboration based on WIOD 28

29 What drives industrial structural change and employment generation? Existing drivers include wages, skills, technology and innovation, industrial organization, business environment, trade and investment Emerging drivers include resource efficiency Yet the impact of new and emerging drivers of structural change on employment depends on the industrial policies at hand 29

30 What role for industrial policy content and process? Promoting structural change Targeting key drivers of structural change Getting industrial policy to work: focus also on process Experimenting, learning and evaluating 30

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