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Industrialization of developing economies in the global economy with an infectious disease

Author

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  • Sato, Hitoshi

Abstract

Manufacturing has long been the center of industrialization strategies for poor developingcountries. This paper first investigates the effects of labor supply constraints onindustrialization, which may have been caused by the coronavirus disease 2019 (COVID-19).Then, the study examines how manufacturing automation could affect industrialized developingeconomies based on the premise that manufacturers may accelerate production automation inresponse to the COVID-19 pandemic. The model predicts declines in developing economies’manufacturing competitiveness and a heterogeneous pattern of recovery from the COVID-19recession. In comparison, developing economies with large manufacturing bases would recoverrelatively quickly, whereas those with weaker manufacturing bases would suffer from along-term decline and manufacturing contraction trends (undesirable deindustrialization).Manufacturing automation can enhance economic welfare, causing a contraction in theunproductive non-tradable good (service) sector. However, with low labor mobility, the welfareeffect is ambiguous, thereby widening the wage gap between skilled and unskilled labor.

Suggested Citation

  • Sato, Hitoshi, 2021. "Industrialization of developing economies in the global economy with an infectious disease," IDE Discussion Papers 815, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper815
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    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=52091&item_no=1&attribute_id=22&file_no=1
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    Citations

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    Cited by:

    1. Kazunobu Hayakawa & Hiroshi Kuwamori, 2021. "Introduction to the Special Issue on “How Does COVID‐19 Change the World Economy?”," The Developing Economies, Institute of Developing Economies, vol. 59(2), pages 121-125, June.
    2. Panda Su & Yu Wang, 2022. "Does It Help Carbon Reduction in China? A Research Paper about the Mediating Role of Production Automation Based on the Carbon Kuznets Curve," Sustainability, MDPI, vol. 14(23), pages 1-18, November.
    3. Oudom Hean & Nattanicha Chairassamee, 2021. "Household consumption expenditure in Thailand during the first COVID-19 lockdown," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 28(2), pages 1-37, December.

    More about this item

    Keywords

    COVID-19; industrialization; automation; financial globalization; social mobility;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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