The determinants of industrialisation in developing countries, 1960-2005
Francesca Guadagno
#2016-031
Industrialisation is generally considered a synonym of economic
development. This paper contributes to the literature on the engine of
growth hypothesis with an empirical analysis of the determinants of
industrialisation. The paper goes back to the Cornwall (1977) model of
manufacturing as an engine of growth and estimates the first equation of
the model, i.e. the equation of manufacturing output growth. Hausman and
Taylor models are estimated for a sample of 74 countries for the period
1960-2005. The results indicate that industrialisation is faster for
larger countries with an undeveloped industrial base, strong export
performance, and undervalued exchange rates. Skills and knowledge
accumulation played an increasingly important role since the mid-1990s.
Robustness checks corroborate the validity of these findings.
Keywords: industrialisation, manufacturing sector, technological change,
industrial policy
JEL Classification: O10, O14, O25
