In the wake of COVID-19, some economists are calling for developing countries to shift from industrialization to services, or even to bypass the manufacturing stage of development altogether. But blind faith in services-led growth is a dangerous illusion, and the arguments supporting it are deeply flawed.
CAMBRIDGE – As the world prepares for the post-pandemic era, the quest for sustainable economic growth is becoming ever more intense – especially for developing countries. It is tempting to call for these countries – the main engine of global growth in recent decades – to shift their development strategies from industrialization to services. As new technologies increasingly allow services to be produced and traded just like goods, some economists even suggest that low-income economies should skip the manufacturing stage of development altogether and go directly from traditional agriculture to the new “growth escalator” of services.
CAMBRIDGE – As the world prepares for the post-pandemic era, the quest for sustainable economic growth is becoming ever more intense – especially for developing countries. It is tempting to call for these countries – the main engine of global growth in recent decades – to shift their development strategies from industrialization to services. As new technologies increasingly allow services to be produced and traded just like goods, some economists even suggest that low-income economies should skip the manufacturing stage of development altogether and go directly from traditional agriculture to the new “growth escalator” of services.