Varieties of deindustrialization and patterns of diversification: why microchips are not potato chips

Abstract

Contrarily to the notion of a natural tendency of deindustrialization, this paper, documenting the existence of a variety of patterns of deindustrialization, performs a cross-country, long-term analysis. Looking at industrial sectors and their technological characteristics, categorised on the ground of the Pavitt (1984) taxonomy, we do find a markedly uneven process of deindustrialization with Science Based and Specialised Suppliers not presenting any inverted U-shaped pattern, neither in employment nor in value added. The heterogeneity holds both for the four Pavitt aggregates and under further disaggregation at industry level. We then study whether the uneven sectoral composition might have exerted an impact on the timing of deindustrialization. Overall, our analysis brings support to the notion that "microchips" are not "potato chips" in their influence on the patterns of long-term economic development of different countries. Moreover, during the phase of globalisation the probability for low-income countries to be stuck to produce "potato chips" has increased and that of transition toward the production of "microchips" has been reducing.

The virtues and limits of specialization in global value chains: analysis and policy implications

“…Countries that manage to specialize in industries featured by larger learning effects and higher returns to scale are better placed to foster a sustained economic development path (Amsden, 1989 ; Dosi, Pavitt & Soete, 1990 ). In a nutshell, producing ‘microchips’ is not the same as producing ‘potato chips’: as has recently been shown by Dosi, Riccio and Virgillito ( 2021 ), the quality of specialization matters, especially for the long-term development prospects of economies.…”

COVID-19 and the Brazilian manufacturing sector: Roads to reindustrialization within societal purposes

“… Following the Structuralist tradition and from a Kaldorian/evolutionary perspective on the role of manufacturing, the basic intuition is that specific sectors and activities matter because they enhance different learning opportunities and different income elasticities of demand. Overall, producing microchips is not the same as producing potato chips ( Palma, 2006 ; Dosi et al., 2020 ). With MNEs seeking greater proximity to the market, which may mean shorter delivery times and greater agility to changes in consumer behavior (fundamental in some industries, as in the textile industry), Brazil has the chance to attract MNE operations.…”

Structural Transformation in South Africa

“…Owing in part to data limitations, aggregated quantitative analyses do not account for important differences, and in some cases provide misleading insights about the process of structural transformation. For example, as shown by recent contributions (Dosi et al, 2020;, the traditional patterns of deindustrialization are highly heterogenous across manufacturing sub-sectors, or different sectoral groupings defined by technological or other organizational features (Pavitt, 1984's andLall, 2000's taxonomies). Thus, it is important to go beyond both the broad sub-sectoral analysis and the recognition of the continuing importance of manufacturing, and to start taking account of the more complex dynamics within and between firms.…”