Manufacturing a thing of the past? Cambridge professor points to China, Vietnam

Labour-intensive industrialisation remains central to economic growth in parts of the developing world, argues Cambridge Assistant Professor Jostein Hauge, as debate continues over the role of manufacturing in job creation and national output.

"Vietnam's manufacturing sector employs 15M people (30% of the workforce). China's manufacturing sector employs 215M people (28% of the workforce). These are two of the world's fastest-growing economies. Labor-intensive industrialisation is clearly not a thing of the past," Hauge wrote on Wednesday.

In an earlier post, he noted the scale of transformation underway in China's industrial base: "In 2000, China accounted for 6% of global manufacturing. In 2030, China is projected to account for 45% of global manufacturing. This kind of shift is unprecedented in the modern world economy."

The professor's post drew a reaction from economist Rafael Guthmann, who wrote: "I think manufacturing employs only 120 million workers in China, about 16% of the total labor force. The other 90 million might be other industrial workers: construction, utilities, and mining."

India, too, has joined the race to become a manufacturing hub. In 2014, Prime Minister Narendra Modi launched 'Make in India' programme to increase manufacturing's contribution to GDP, create jobs, and boost exports. The initiative has focused on key sectors including electronics, defence, and renewables.

But former Reserve Bank of India Governor Raghuram Rajan, speaking to Frontline magazine, has advised a broader approach to employment strategy. While not disputing the need for manufacturing jobs, he said India should look beyond export-led industrialisation alone.

"Our point is you need to think on a multi-level platform. We do need exports: we are doing very well in high-skilled services. Today, we account for 4.5 per cent of global exports in services; manufacturing more like 1.5 per cent. But that can’t employ everyone,” Rajan said.

He also emphasised the need to create domestic employment across a range of moderately skilled sectors. "We can also have a huge market for domestic services, which are more moderately skilled—truck driving, logistics, repair, carpentry, plumbing. We can create many more jobs, but for that we need skill building," he said.