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The Way Forward for Services-Led Economic Development

Today’s developing economies are in a bind, because innovation in manufacturing has taken a predominantly skill-biased form, reducing demand for workers with relatively low levels of education. This means that labor-absorbing services must become productive enough to support income growth.

BERLIN – The future of developing countries is in services. This may sound odd in view of the fact that industrialization has been the traditional road to growth and eventual prosperity, one traveled by all of today’s rich economies and by more recent successes such as South Korea, Taiwan, and China. Manufacturing seems even more essential given that industrial policies to revive it are back in fashion in the US and Europe.