The future of the factory

What is the future of the factory in economic development? That is the subject of a forthcoming book by this episode’s guest, Dr Jostein Hauge from the University of Cambridge. Numerous scholars, Harvard’s Dani Rodrik arguably most prominent among them, have noted that industrialisation among contemporary developing countries is more muted than it was for the Asian Tiger economies and other nations that rose in the second half of the 20th century. In place of industrialisation and associated expansions in manufacturing capacity, we see a relatively larger role played by the services sector, both in terms of relatively high-end services like software development, copy editing, and call centres, and smaller, often informal operations like kiosks, airtasker, and tourism. What are the implications of this for development policy and the potential of economic growth to reduce poverty? Service-sector tasks are typically more capital and less labour-intensive than manufacturing, which limits their ability to provide jobs and wages. But they are also higher value-added tasks, which allows them to contribute substantially to wealth generation. Some nations, notably India, are betting that they can largely skip industrialisation and jump straight to services. How might that play out? Tune in to find out. 

https://www.josteinhauge.com/about 

Hauge, J. (2020). Industrial policy in an era of global value chains: Towards a developmentalist framework drawing on the industrialisation experiences of South Korea and Taiwan. The World Economy, vol. 43, pp. 2070–2092.  DOI: 10.1111/twec.12922 

Rodrik, D. (2014). Are services the new manufactures? Project Syndicate: https://www.project-syndicate.org/commentary/are-services-the-new-manufactures-by-dani-rodrik-2014-10 

On reciprocal control mechanisms—Alice Amsden (2001). The Rise of “The Rest”: Challenges to the West from Late-Industrializing Economies. Oxford University Press. 

Benjamin Selwyn (2018). Poverty chain and global capitalism. Competition and Change, vol. 23, no. 1, pp. 71–97. https://journals.sagepub.com/doi/full/10.1177/1024529418809067 

Jason Hickel in The Guardian on the feasibility of a global minimum wage: https://www.theguardian.com/lifeandstyle/2022/may/13/global-minimum-wage-ask-an-expert 

Norwegian show where fashion bloggers are sent to work in sweatshops: https://www.smh.com.au/lifestyle/fashion/norwegian-reality-show-sends-fashion-bloggers-to-work-in-cambodian-sweatshop-20150123-12whuz.html 

Kevin Gallagher and Richard Kozul-Wright (2021). The Case for a New Bretton-Woods. Polity Press. https://www.wiley.com/en-au/The+Case+for+a+New+Bretton+Woods-p-9781509546541