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Have you heard about the GGDC/UNU-WIDER Economic Transformation Database?

On 17 February 2021 the Groningen Growth and Development Centre (GGDC) and UNU-WIDER Economic Transformation Database (ETD) will be launched. The new database provides crucial information on changes in the economic structure of economies across Africa, Asia, and Latin America. Preliminary findings suggest a trend reversal in many developing countries towards industrialization.

Historically, the reallocation of workers from low- to high-productive economic activities has driven sustained improvements in living standards. The industrial revolution caused a long period of economic growth in Europe and the United States in the nineteenth century. Later, other countries were able to catch up through an expansion of manufacturing and other high-productivity sectors. Indeed, dynamic economic sectors that can absorb workers and serve global markets appear crucial for development and poverty reduction.

The predecessor to the ETD, the GGDC 10-sector database, has been used by scholars to document patterns of de-industrialization in much of the developing world during the 1990s and early 2000s. This finding is worrisome. It suggests the traditional route to development has been cut off. Yet, various scholars have argued — especially in the context of Africa — that it is too soon to conclude that countries are running out of industrialization opportunities. Indeed, what is needed to advance the debate is more recent data for a much larger set of developing countries than what has been considered thus far.

Trend reversal?

New findings based on the ETD suggest that until recently de-industrialization was widespread across Latin America and sub-Saharan Africa, but the trend has reversed. In a forthcoming paper — Kruse, Mensah, Sen, and de Vries (2021) — we document an expansion of the manufacturing employment share for many countries in Asia, sub-Saharan Africa, and also several in Latin America. Employment industrialization is significant in regressions that control for demographic and income trends. This challenges the view that developing economies need to find alternatives to industrialization for sustained growth and poverty reduction. Indeed, the expansion of production activities might still be a feasible route of development.

The findings carry important implications about the opportunities for growth and poverty reduction. Yet, they also create new questions. Why has there been a reversal in the industrialization trend? What is the nature of production activities that expand? Most importantly, are these modern manufacturing firms which are expanding? Will manufacturing continue to expand, and will it relate to sustained productivity and income growth? Does re-industrialization imply that manufacturing can still be important for economic development?

Launch date

Mid-February will mark the release of a new database — the GGDC/UNU-WIDER Economic Transformation Database (ETD). It aims to inform the debate about industrialization and serve the wider academic and policy community working to analyse and understand economic development. The ETD provides time-series of employment and real and nominal value added by twelve sectors in fifty-one countries for the period 1990–2018. It includes twenty Asian, nine Latin American, four Middle East and North African (MENA), and eighteen sub-Saharan African countries/economies at varying levels of economic development (see Table 1 below). The ETD is constructed from an in-depth investigation of the availability and usability of statistical sources on a country-by-country basis. It will be made publicly available online at GGDC and UNU-WIDER.

The launch of the ETD and the research it stimulates will allow deeper progress on the UN’s 2030 Agenda for Sustainable Development.

Table 1: Content of the GGDC/UNU-WIDER Economic Transformation Database

The views expressed in this piece are those of the author(s), and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors.