Industrialisation, Innovation, Inclusion
Wim Naudé & Paula Nagler
#2015-043
Can industrialisation be socially inclusive? Is higher income inequality
within and between countries the inevitable outcome of technology-driven
industrial development? In this paper, prepared as background for the
UNIDO's Industrial Development Report 2015, we examine the role of
industrialisation and innovation in socially inclusive development.
First, we define social inclusiveness and describe the relationship
between technological innovation, structural change and social
inclusiveness. Second, we discuss globalisation and technological
innovation and their joint impact on income inequality. Third, we
explore conditions under which technology-driven industrial development
may be consistent with socially inclusive development. In our
conclusions we emphasise the importance of education to enable workers
to utilise technology, and of fiscal policies to strengthen the
resilience of communities when rapid technological change causes
disruptions in the labour market. Finally we argue that a 'social
contract' between governments, their citizens and corporations is
crucial for inclusive industrialisation.
JEL Classification: L16, L26, O14, O15, O33
Keywords: Industrialisation, Inequality, Innovation, Labour,
Manufacturing, Structural Change, Technology