By Wasana Nadeeshani Sellahewa
UK (Commonwealth) _ The primary driver of economic growth is said to be industrialization. Rapid technical advancements, economies of scale, and ease of integration into global production networks are just a few of the unique traits associated to the manufacturing industry. In addition, a number of researchers have used empirical evidence to support the idea that economic development is the process of moving from agriculture to manufacturing and then from manufacturing to services. Consequently, it used to be believed that since the industrial revolution, no country has become a big economy without becoming an industrial power. This argument, however, has been refuted. The expanding role of the services sector in the global economy and the rise of the information and communications technology (ICT) industry show that the sector is now poised to replace manufacturing as the primary driver of economic growth in emerging markets. Additionally, there is growing agreement that the impact of the services sector on the entire economy may be understated by official figures. The genuine contributions of the ICT industry to the entire economy are undercut by measurement challenges and a disregard for spillover effects.
One explanation for our empirical results is that, in contrast to established economies, where knowledge-based innovation is primarily responsible for development, middle-income economies’ primary drivers of economic expansion are very distinct from those of developed economies. On the other hand, structural change or the import of technology from established economies account for the majority of advances in worker productivity in emerging economies. For middle-income nations, quick adoption of cutting-edge technology is increasingly crucial at this point. The adoption of frontier technology, however, differs significantly between industries.
Additionally, investors can more effectively adopt cutting-edge technology for local enterprises if a country has superior institutions and a greater degree of human capital. As a result, manufacturing, where most technological transfer occurs, may make greater use of native human resources and economic institutions than other sectors.
Long-term, labor productivity is essentially everything. In reality, catching up with high-income economies for emerging nations involves closing the productivity gap. Contrary to what the endogenous growth theory predicts, however, economic development in these middle-income nations mostly results from importing cutting-edge technology from wealthy economies. It is true that a few variables, such as the quality of human capital, the home political system, and economic openness, may affect the spread of foreign technology. However, the way that various businesses utilize cutting-edge technology may also differ. Due to this trait, several industries are especially important for middle-income economies.
When it comes to the long term, worker productivity is virtually everything. Eliminating the productivity gap is really the process by which emerging countries catch up to high-income ones. Contrary to what the endogenous growth theory suggests, however, for these middle-income nations, economic development is mostly a result of importing cutting-edge technology from wealthy economies. Of course, a few variables, such as the amount of human capital, the nature of the political system in place, and the degree of economic openness, may have an impact on the spread of foreign technology. The way that various businesses utilize cutting-edge technology, however, is also likely to be unique. Some industries are especially pertinent for middle-income economies because of this trait.
The World Bank collaborates with Middle Income Countries (MICs) in their capacities as clients, shareholders, and international players to address the wide range of development requirements that these countries have.
The World Bank still has a sizable financing program in several MICs that supports the nation’s development objectives. Other MICs see a decline in World Bank loans while seeing a rise in the need for expertise and consulting services to address development difficulties. Many times on a reimbursable basis, other MICs no longer borrow money from the World Bank and now just use its knowledge and advisory services to address continuing problems and support the implementation of their own-financed initiatives.
