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The Future of Manufacturing in the Global South

As a growth strategy for low-income countries, the efficacy of traditional manufacturing is waning. To compete in the technology-driven global economy of the future, developing countries will need new models to increase productivity and put people to work.

WASHINGTON, DC – In emerging markets, manufacturing has historically been a source of productivity, growth, and jobs. Since the 1950s, industrialization has kept economies in Latin America, Asia, and Eastern Europe on a steady glide toward higher stages of development.

But as a growth strategy for low-income countries, the efficacy of traditional manufacturing is waning. To compete in the technology-driven global economy of the future, developing countries will need new models to increase productivity and put people to work.

Two factors are conspiring to cast doubt on the wisdom of manufacturing-led development. The first is competitiveness: attracting production to low-income countries has never been harder. Labor costs, exchange rates, and infrastructure are all fiercely contested, which has led to a consolidation of global manufacturing hubs.

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