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Quality of Growth and Poverty Incidence in Low Income Countries: The Role of Manufacturing

Author

Listed:
  • Sarah Lynne S. Daway

    (School of Economics, University of the Philippines Diliman)

  • Geoffrey M. Ducanes

    (School of Economics, University of the Philippines Diliman)

  • Raul V. Fabella

    (School of Economics, University of the Philippines Diliman)

Abstract

There has been a growing conversation about the revival of Manufacturing to push back growing inequality and reduce poverty. We discuss the pathways by which a higher share of the Manufacturing sector in GDP may bring about lower poverty incidence while a higher share of Services may have the opposite effect. We first compare the poverty reduction experiences of the Philippines whose growth has been largely Services-led in the last two decades with that of China and Vietnam, whose growth have, for the most part, been Manufacturing-led. We then present evidence based on cross-country panel data for low income countries that the Manufacturing share in GDP exhibits a significant negative association with poverty incidence while the higher Services share exhibits a significant positive association with poverty incidence. Low income countries seeking more inclusive growth may do better if they privilege their Manufacturing sector over the Services sector.

Suggested Citation

  • Sarah Lynne S. Daway & Geoffrey M. Ducanes & Raul V. Fabella, 2017. "Quality of Growth and Poverty Incidence in Low Income Countries: The Role of Manufacturing," UP School of Economics Discussion Papers 201708, University of the Philippines School of Economics.
    • Handle: RePEc:phs:dpaper:201708
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    File URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/1511/990
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    References listed on IDEAS

    as
    1. Dani Rodrik, 2008. "The Real Exchange Rate and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 365-439.
    2. Desiree A. Desierto & Geoffrey M. Ducanes, 2013. "Philippines," Chapters, in: Hal Hill & Maria Socorro Gochoco-Bautista (ed.), Asia Rising, chapter 13, pages 385-407, Edward Elgar Publishing.
    3. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    4. Andrew G. Berg & Jonathan D. Ostry, 2017. "Inequality and Unsustainable Growth: Two Sides of the Same Coin?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(4), pages 792-815, November.
    5. Aldaba, Rafaelita M., 2013. "ASEAN Economic Community 2015: SME Development - Narrowing Development Gap Measure," Discussion Papers DP 2013-05, Philippine Institute for Development Studies.
    6. Sarah Lynne S. Daway & Raul V. Fabella, 2015. "Development progeria: the role of institutions and the exchange rate," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 52(2), pages 84-99, December.
    7. Rafael Ranieri & Raquel Almeida Ramos, 2013. "Inclusive Growth: Building up a Concept," Working Papers 104, International Policy Centre for Inclusive Growth.
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    Cited by:

    1. Raul V. Fabella & Geoffrey Ducanes, 2019. "Power Industry Disruptors and Prospects of the Electricity Demand in the Greater Metro-Manila Area," UP School of Economics Discussion Papers 201901, University of the Philippines School of Economics.

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    More about this item

    Keywords

    quality of growth; low income countries; poverty incidence; industrial structure; manufacturing; services;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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