Ever since the Industrial Revolution, manufacturing has been the key to rapid economic growth. Though optimists believe that service industries can play the role of "growth escalator" that manufacturing did in the past, two key differences between the sectors suggest otherwise.
PRINCETON – The global discussion about growth in the developing world has taken a sharp turn recently. The hype and excitement of recent years over the prospect of rapid catch-up with the advanced economies have evaporated. Few serious analysts still believe that the spectacular economic convergence experienced by Asian countries, and less spectacularly by most Latin American and African countries, will be sustained in the decades ahead. The low interest rates, high commodity prices, rapid globalization, and post-Cold War stability that underpinned this extraordinary period are unlikely to persist.
PRINCETON – The global discussion about growth in the developing world has taken a sharp turn recently. The hype and excitement of recent years over the prospect of rapid catch-up with the advanced economies have evaporated. Few serious analysts still believe that the spectacular economic convergence experienced by Asian countries, and less spectacularly by most Latin American and African countries, will be sustained in the decades ahead. The low interest rates, high commodity prices, rapid globalization, and post-Cold War stability that underpinned this extraordinary period are unlikely to persist.