ABSTRACT
There is a long tradition in economics which argues that manufacturing industry has a critical role in growth, particularly at relatively low income per capita. Several features of the sector have been highlighted to justify this focus:
Output per worker (productivity) is normally considerably higher than in agriculture or services (although not in mining) so that structural change in favour of manufacturing raises the overall productivity of an economy.
Productivity growth in manufacturing has historically been more rapid than in other sectors due to greater technical change and learning effects.
Manufacturing is the sector where there is greater scope for specialisation as output grows.
Its linkages with other parts of the economy are greater than for any other aggregate sector, thus offering the greatest scope for externalities.
As a key tradable activity it offers the greatest potential for expansion via exports with considerable scope for transferability of skills, so that within manufacturing it is easier than in other sectors to branch out into the production of similar but differentiated products.
