Rethinking Unconditional Convergence in Manufacturing in the Age of New Technologies

Abstract

Abstract We revisit unconditional convergence within manufacturing with a focus on differences in technology intensity across industries. For Latin American and Sub-Saharan African economies, we observe that low-technology and medium-technology intensive industries experience a significantly slower convergence in comparison to high-technology intensive ones. In contrast, we find no evidence of a significant differential for low-technology industries’ convergence in Asian economies, and if anything, we see that medium-technology intensive sectors experience a faster convergence than high-technology industries. In developed economies, we observe that while low-technology industries experience a slightly slower convergence, medium-technology industries converge at similar rates to high-technology industries. We also find that these differences emerge during the period of increased global integration, which exposed developing economies to increased competition both from advanced markets and fast industrializers within the developing world. Finally, we show that differential convergence patterns are stronger after the peak of manufacturing employment share has been reached. We discuss the implications of these trends for the future of development policy making.