Thread by @DinaPomeranz

Keynote by @rodrikdani

Great to see that trade and development is becoming a "thing" again in academic econ. It used to be a big topic, then for a while trade econs and development econs lost some interest in each others' work. Great to see them coming together again more, e.g. at this conference.

For Asian "growth miracle" countries, industrialization-led structural change was a key mechanism. But such rapid and sustained industrialization may not be available anymore in today's environment.

If there is convergence, it seems extremely slow. At this pace it would take 200 years to close the gap to rich countries by half.

Why are manufacturing industries special?

Productivity convergence in formal manufacturing. Manufacturing acts as a sort of economic "escalator".

In addition, it traditionally tended to be intensive in labor that was abundant in lower income countries, and finally, the readability can help expansion without worsening terms of trade.

How structural change enabled growth miracles. Policies also mattered. Both domestic policies and the international policy environment.

Recently, there's a worrying trend of premature de-industrialization. This means they are able to absorb significant lower levels of labor into production. I part this may be due to the evolution of the value chains. Increasingly, manufacturing becomes more skill-intensive.

Finally, a smaller part may also be due to the fact that as the world is becoming richer, global consumption moves away from goods and more towards services.

The pattern of structural change has changed substantially:

What about recent growth spurts? E.g. Ethiopia and India?

It's more of a demand-driven growth model:

So what are the alternatives? Cam services be the new manufacturing? Services come on 2 types. Non-tradables cannot act in the same way as manufacturing did. It will run into constraints on the demand side due to non-tradability.

Tradables OTOH tend to be skills-intensive.

This is a somber view. But it doesn't mean there will be no growth. Growth will be moderate. We cannot expect the sustained rates of 8% we have seen in some previous cases. More in the range of 3% per capita. This is still high historically, but not like the "growth miracles".

Comment from @PennyG_Yale: Lots of agreement with her talk yesterday. But her point was that some larger countries can make headway through demand from a growing middle class. This channel may create demand for basic manufacturing.
-> less pessimistic
-> case for redistribution