Wie arme Länder 2024 (nicht) reich werden
Industrialisation is even more difficult to induce than it was 40 or 50 years ago. As a result of technological advances, fewer workers than ever are needed to produce, say, a pair of socks. In India five times fewer workers were required to operate a factory in 2007 than in 1980. Across the world, industry now runs on skill and capital, which rich countries have in abundance, and less on labour, meaning that a large, cheap workforce no longer offers much of a route to economic development. Mr Modi and others therefore have a new game plan: they want to leap ahead to cutting-edge manufacturing. Why bother stitching socks when you can etch semiconductors?
The first is that the state is now much more active in economic development than at any point in recent decades. Somehow an economy must evolve from agrarian poverty to diversified industries that can compete with rivals in countries which have been rich for centuries. To do so requires infrastructure, research and state expertise. It may also require lending at below market rates. This means that a certain amount of state involvement in the process is inevitable, and that policymakers will have to pick some winners.
According to work by Mr Rodrik, manufacturing has been the only type of work where poor countries have improved their productivity at a faster rate than rich countries, and so caught up. Modern industry may not offer the same benefit. Rather than spending time attempting to make factory processes marginally more efficient, workers in countries trying to get rich increasingly mine green metals (working in an industry with notoriously low productivity), serve tourists (another low-productivity sector) and assemble electronics (rather than making more complex components). All this means that the race to get rich in the 21st century will be more gruelling than the one in the 20th century.