Globalization and Industrialization in 64 Developing Countries, 1980-2003

Abstract

This study investigates the effect of the latest wave of economic globalization on manufacturing employment in developing countries. It revisits the classic debate on the effect of internal and external influences on industrialization, and extends this debate to contemporary developing countries. In the process, it assesses the evidence for development/productivity, world systems/dependency and globalization explanations, and uses a comprehensive dataset on 64 developing countries from 1980 through 2003. The results generally show that manufacturing employment increased in most developing countries. First, this study finds that the level of economic development measured by gross domestic product per capita is the most important factor influencing the size of manufacturing employment. Second, economic globalization also influences manufacturing employment in developing countries, but mainly through trade. The size of exports and low-technology exports have a significant positive effect on manufacturing employment in developing countries. Finally, the analysis provides limited support for world systems/dependency theories. Raw materials exports do not significantly influence manufacturing employment while foreign direct investment has a negative impact in some models. This study concludes that the latest wave of economic globalization contributed to the expansion of manufacturing employment in developing countries, although it is not the most significant factor shaping the size of manufacturing employment in these countries.