Stagnating Industrial Employment in Latin America

Abstract

The industrialization of developing countries has fundamentally transformed work, employment, and labor for millions. Despite the industrialization of most of the developing world, we present evidence that Latin America has experienced stagnating industrial employment in the past few decades. Benefiting from recently available data on industrial employment as a percentage of total employment from 1980 through 2006, we analyze fixed-effects models for 20 Latin American countries. Specifically, we examine three theoretical explanations: productivity/comparative advantage, institutionalism, and dependency/world-systems. Our analyses demonstrate that the prevailing productivity/comparative advantage explanation has limited value. By contrast, we find supportive evidence for a combination of institutional and dependency/world-systems variables. In particular, the stagnating industrial employment share in Latin American countries has been driven by the negative effects of (in order of magnitude) the Mercosur trade agreement, mineral and ore exports (as a percentage of total exports), the duration of the current political regime, military spending (as a percentage of GDP), and inward foreign direct investment flows (as a percentage of GDP).

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“…: 71–2). Brady et al () and Bogliaccini () both highlight the impact of trade liberalizations since the 1980s on deindustrialization in Latin America, while the data from Abdon and Felipe (: 15) also show that regional export sophistication stagnated from about 2000 onwards. Despite the variety of views, the implicit consensus is that even the most industrially advanced economies in the region are stuck in a middle‐tier position within the global industrial hierarchy, pressured from below and yet with strong constraints on upgrading.…”

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“…However, how these processes operate is context-specific. Like urbanization, there is significant heterogeneity in industrial manufacturing processes across the global economy (Brady et al, 2011). Over the latter part of the twentieth century, the global organization of production shifted from a predominately US-dominated, Fordist economy to one defined as flexible accumulation, characterized by dispersed global supply chains, product differentiation, and intensified spatial competition (Harvey, 1990).…”