Productive transformation and industrial policies

Web page | 19 March 2013
Experience shows that some developing countries achieved high performing, sustained and job-rich growth and rapid catching up in living standards. These catching up countries not only have been growing at a high and sustained rate for a long period of time, but with a pattern of growth that was characterized by sectoral transformation (shifting resources from agriculture to manufacturing and service sectors), diversification into new economic activities and into increasingly complex products across sectors, and a high rate of technological change within sectors.
Development experience also shows that countries differ in the patterns and pathways of productive transformation and that some countries experienced higher productivity and job growth, faster decent work creation and employment, faster learning and more rapid improvement of living standards and poverty reduction than others. The nature of structural and technological change also impacts on the quality and developmental value of jobs. Jobs with high technology and skills content enhance opportunities for workers to acquire new knowledge and technological competences which helps to increase the dynamics of catching up. Jobs in value chains, jobs in the informal and formal economy, and in rural or urban regions have different impact on employment opportunities for women, for young people, for skilled and unskilled workers.
Recent ILO research demonstrates the important role of social capabilities for productive transformation. Country-specific capabilities determine the space and boundaries for productive transformation. Countries even with similar factor endowment may have developed different social capabilities. Therefore, they may differ in their products, new industries, economic activities and technology.. Social capabilities are embodied in collective forms of knowledge, e.g. in the diversity and complexity of the social knowledge base, and in the “knowing how to do” embodied in management, coordination, training or technological routines of enterprises, and in formal and informal institutions.
Within this context, ILO’s research is focusing on three main dimensions:
First, on analytical work to understand processes and dynamics of productive transformation, and how different patterns of structural and technological change impact on the quantity and quality of jobs and on employment patterns in terms of skills, gender, age, formality, rural and urban.
Second, on exploring the nature of social capabilities and analysing how a country’s knowledge base and collective competences shape feasible patterns of diversification, and paths of sectoral and technological change.
Finally, on analysing the role of Governments and public policies in promoting the accumulation of social capabilities and accelerating the dynamics of productive transformation for the creation of productive jobs with high developmental value.

Key resources

  1. Working paper

    Industrial policies and capabilities for catching up: Frameworks and paradigm

    15 July 2011

  2. Report

    Growth, Productive Employment and Decent Work in the Least Developed Countries

    29 March 2011

  3. Book review

    Industrial Policy and Development: The Political Economy of Capabilities Accumulation

    3 January 2010