Globalisation and Indutrialisation in 64 Developing Countries

8/22/2019 Globalisation and Indutrialisation in 64 Developing Countries

1/31

Global izat ion and Industr ia l izat ion in 64 DevelopingC o u n t r i e s , 1 9 8 0 - 2 0 0 3Y u n u s K a y a , U n i v e r s it y o f N o r th C a r o l i n a , W i lm in g t o nThis study investigates the effect of the latest wave of economic globalization onmanufacturing employment in developing countries. It revisits the classic debate onthe effect of internal and external influences on industrialization, and extends this de-bate to contemporary developing countries. In the process, it assesses the evidence fordevelopment/productivity, world systems/dependency and globalization explanations,and uses a comprehensive dataset on 64 developing countries from 1980 through2003. The results generally show that manufacturing employment increased in mostdeveloping countries. First, this study finds that the level of economic developmentmeasured by gross domestic product per capita is the most important factor influ-encing the size of manufacturing employment. Second, economic globalization alsoinfluences manufacturing employment in developing countries, but mainly throughtrade. The size of exports and low-technology exports have a significant positive effecton manufacturing employment in developing countries. Finally, rhe analysis provideslimited support for world systems/dependency theories. Raw materials exports do notsignificantly influence manufacturing employment while foreign direct investmenthas a negative impact in some models. 'Hiis study concludes chat the latest wave ofeconomic globalization contributed to the expansion of manufacturing employmentin developing countries, although ir is not the most significant factor shaping the sizeof manufacturing employment in these countries.

lilis study explores the effect of the latest wave of economic globalization onmanufacturing employment in developing countries. TKe ongoing integration ofnational economies since thelS'** and 19''' centuries has intensified in the past twoor three decades (Held et al. 1999). Some scholars argue that e conom ic exchangesbetween relatively independent parties have been replaced by complex and highlyinterdependent systems of industrial production and economic exchange orga-nized on a global scale (e.g., Dicken 2003; Gereffi 2005). In recent decades, de-veloped countries saw a significant portion of their consumption made possibleby industrial production in developing countries, while developing countriesbecame exporters of manufacturing products.' Concurrently, there were substan-tial declines in manufacturing employment in developed countries and significantincreases in developing countries. The effect of the latest wave of globalization in


2/31

1 1 5 4 S o c i a l F o r c e s 8 Z { Z )sphere. Some see the latest wave of globalization as a significant force on manu-facturing employment in developing countries {e.g., Wood 1994; Dicken 2003).However, most of the debate and empirical analyses are confined to developedcountries, and com paratively little research has been done on developing countries(e.g., Alderson 1999; Brady and Denniston 2006).

Industrialization has always been a central topic in sociology. Most of the foundingtheories of sociology were built on the industrialization that took place in WesternEurope and the United States in the 19'^ and early 20''' centuries. The spread ofindustrialization throughout the developing world has also been an important con-cern for scholars. The effea of externalfectorson the industrialization of developingcountries has long been a contentious topic in these debates. Many scholars, rangingfrom early social theorists, convergence and modernization theorists of the 1950sand 1960s, and contemporary economists, perceived industrialization as a processassociated with economic development and productivity within a country. Theypredicted that manufacturing employment will rise and decline across countriesas they pass through the stages of economic development. However, many othersargued that economic development and industrialization in developing cotmtriesis different from the early-industrialized cotmtries. Dependency and world-systemstheories offered an account of the world economy as a whole, in which the develop-ing economies are dependent on early-industrialized countries.Past ResearchA strong line of thinking in the social sciences perceives industrialization as aprocess associated with the level of economic development and productivity ina country where external factors play a lesser role. One theory holds that therelationship between development and productivity, and industrialization shouldbe similar across cotmtries. In contrast, world-systems and dependency theoristsargue that there is an exploitative relationship between developing and early-industrialized cou ntries, which limits the industrialization of the former. Recently,the rapid changes in the world economy led many to argue that economic global-ization became a powerful influence in expanding man ufacturing employment indeveloping countries.Economic Development, Productivity and Manufacturing Employment


3/31

Globalization and Industrialization 1155agricultural products and the relative demand for diem decrease, while the demandfor man ufacturing increases. As a result, m anu facturing em ploy m ent iticreases. Inthe later stages of eco nom ic developm ent, however, the dem and for ma nufacturingalso decreases while the dem an d for services increases. This shifts em plo ym en t fromm anu facturing to services. Th us, Clark projected a reversed U-shaped relationshipbetween economic development and manufacturing employment. In the recentdebate on deindustrialization in developed coun tries, mo st econom ists adopt C lark'sview, but add productivity to the story. Krugman and Lawrence (1994) argue diatspending on man ufacturing goods and their prices decline due to higher p roductiv-ity in manu facturing. R owthorn and Wells (1987) and Row thorn and Ramaswamy(1997) claim that deindustrialization emerges with increasing productivity and haslitde to do with Foreign direct investment or trade. '

The quest ion of industr ial izat ion in countr ies other than the early-industr i -alized countries came under greater scrutiny by both Western and non-Westernintellectuals with the em ergence of colonies as indep en den t nation-states after theSecond World War. ' In this period, two relatively optimistic theories envisionedthe realization of modernization and industrialization in developing countries.Modernization theorists argued that industrialization in developing countries ispossible through the replication of the conditions that created modern economiesin early-industrialized countries (Levy 1966). Inkeles and Smith (1974) predictedthe emergence of "modern man" in developing countries as a building block formodern industrial societies. In similar fashion, convergence theorists predictedthat institutional structures and labor relations similar to that of industrializedcountries will emerge in developing countries (Kerr, Harb ison, D un lo p a nd Myers1 9 6 0 ; Moore and Feldman I960; Moore 1965).

In sum, both earl ier and contemporary proponents of this account expectsimilar patterns o m anufa cturing em ploy m ent across countries, in which the sizeof manufacturing employment can be predicted by the level of productivity andeconomic development .W o r / S y s t e m s a n d D e p e n d e n c yIn the 1960s and 1970s, dependency and world systems theories challenged mod-ernization the ories. These theories advanced the position that there is a relationshipof dependency and exploitation between developing and industrialized countries


4/31

1 1 5 6 S oc i a l F o rces 88 13 ]Chase-Dtmn and Grimes (1995) explain that, in the post-colonial world, the

maintenance of the world system is achieved through market mechanisms ratherthan the use of direct threat by military might as in earlier times. Dependencyand world systems theorists perceive trade and foreign capital as the main marketmechanisms. Foreign trade com position, in which a peripheral country exports rawmaterials and semi-processed goods and imports m anufactured and /or capital goods,is petceived as an indicator of dependence on core countries. Therefore, dependencyand w orld systems theorists perceive open trade as detrimental to the developm entof peripheral countries and fevo r protectionism and disengagement as necessary forindustrialization (Cardoso and Faletto 1979). For example, Schwartzman (1995)ai^es that trade dependence hurt industrialization in Brazil and Mexico.In the 1980s, FDl in developing countries became a focus of inquiry for worldsystems and dependency theorists (Firebaugh 1997). Bornschier, Chase-Dunnand Rubinson (1978) claim that FDI in peripheral countries creates investmentdependence. They and others argue that this dependence on foreign capital im-pedes development in the third world countries (Bornschier and Chase-Dunn1985; London and Smith 1988; Boswell and Dixon 1990).^ Despite providing arigorous operationalization and test of world systems and dependency theories,these scholars focused on economic growth and development, not industrializa-tion. However, if the dependency theorists are correct, perhaps it is reasonable toexpect FD I in developing countries to be a negative influence on industrializationas well. For example, Cardoso and Faletto (1979) initially suggested that the de-pendent industrialization Latin America limited employment in manufacturing.*'Bornschier, Chase-Dunn and Rubinson (1978) and Bornschier and Chase-Dunn( 1985) argue that while FDI flows might enhance econom ic growth in developingcountries in the short run, the long-term dependence on foreign capital, indicatedby FDI stock, hurts economic growth. Although it is crucial to acknowledge thatdependency scholars have mainly focused on development, perhaps an extensionof their beliefs would conclude that long-term dependence on foreign capital im-pedes the development of domestic capabilities for industrialization and preventsa country from industrializing fully.

IGloba l iza t ion a nd M anufac tu ring Em p loym ent \The term globalization was not widely used in academic and public discussionuntil the early 1990s (Robertson 1992). By the end of the decade there were


5/31

G l o b a l i z a t i o n a n d I n d u s t r i a l i z a t i o n 1 1 5 7ganized through complex networks of firms, which are sometimes labeled asGlobal Commodity Chains or Global Value Chains (e.g., Gereffi 2005; Dicken2003). Within these networks, firms from developed economies relocate theirmanufac turing activities in developing countries by investitig in or sub con tracting ,while they focus on higher value activities such as research and developm ent, andmarketing (Gereffi 2001; Kaplinksy 2000). This, then, translates into increasingmanufacturing exports and FDI, and expanding manufacturing employment indeveloping countries.

Using Heckscher-Ohlin theory,'" Wood (1994) claims that manufacturing ex-ports increase the size and earnings of low-skilled workers in develop ing c ountries .He insists that the abundance of low-skilled labor in developing countries createsa comparative advantage, and argues that trade lessens the manufacturing autarkyof developed countries in which they produce most of the products for domesticconsumption (Wood 1995)." Dodzin and Vamvakidis (1999) show that increas-ing levels of trade led to greater levels of industrialization , with the em ergence oflabor-intensive industries in predom inantly agricultural economies from 1970to 1995. Similarly, Bollen and Appold (1993) demonstrate that manufacturingexports significantly increases the size manufacturing employment.

Many now believe that the low production costs in developing countries at-tracted foreign investment in recent years, even more so than domestic marketsand natural resources. A U.N. report (2000:2) introduces Bangladesh as "Besidesrepresenting a potential market in itself (and potential access to the much largerSouth Asian market), Bangladesh also offers considerable potential as a base forlabour-intensive manufacturing.''^ Some use the concept export-oriented FD I lo referthis phenomenon (see Zhang 2005). According to this idea, firms relocate theirmanufacturing facilities in places such as China and Bangladesh to take advantageof low costs and ship their products all over the world rather than selling in thedom estic markets of these countries. To the extent that this new type of FD I exists,it may positively influence manufacturing employment in all developing countries.

In recent years, some developing countries became outward international inves-tors, especially in other low-cost developing countries as the costs of productionincreased in their domestic economies (GerefE 2005; Gereffi and Memodovic20 03 ).'- The investments by Taiwanese and Korean firms in mainland C hin aexemplify this trend (Zhang 2005). This FDI outflow may halt the increase inmanufacturing employment and cause a decline. For example, Chen and Ku


6/31

1 1 5 8 S o c i a / F o r c e s 8 8 { 5 )countries and the deindustriaJization of richer countries. T o my knowledge, no studyhas fully scrutinized the various d imensions of globalization s impact on manufactur-ing employment in developing countries during this most recent period.

I

Data and MethodsTo explore the influence of globalization on manufacturing employment in de-veloping countries, this study analyzes an unbalanced panel of 64 developingcountries from 1980 to 2003. '^ The sample includes all developing countriesthat met three criteria: a population of half a million or higher, less than $5,000GDP per capita in 1980, and data on the labor distribution for at least two timepoints.'** All countries fitting these criteria have been included in order to increasethe representativeness of the sample.'^ Ex-communist coun tries are excluded fromthe sample."^" The changes in manufacturing employment in these countries maybe the result of the transition to capitalism because they experienced massiveindustrial restructuring and privatization, following the fall of communism (Nee1 9 8 9 ; St ark l99 2) . In W allerstein's terminology, my sample is composed of periph-eral and semi-peripheral countries. Data have been collected for years 1980, 1985,1 9 9 0 , 1995,2000 and 2003. Because of missing data for some countries, coun trieshave between two and six observations. The unit of analysis is the country-yearand the total num ber of observations is 23 4. ,T h e Dependent Variable iTable 1 presents descriptive statistics and sources for all variables. The d ependentvariable is the manufacturing share of employment, calculated as the percentageof total employment in a country (World Bank 2007). The manufacturing shareof employment is the standard indicator of industrialization in a country and isused commonly in similar studies (Alderson 1999, 1997; Brady and Denniston2006; Rowthorn and Wells 1987).

Figure 1 shows the trend in manufacturing em ploym ent (the averages of cou n-try percentages) in the countries in the sample between 1980 and 2003 . Theaverage manufacturing employment increased from 15 percent in 1980 to 22percent in 2003. '^ This suggests a significant surge of industrialization in develop-ing countries after 1980. By comparison, m anufacturing em ploym ent declined toan average of 2 5 percent by 2001 in developed economies (Brady and Denniston


7/31

Globalization and Industrialization 1159

- aC O =

jrce

otf>

z

oD

11Ji.(

ccS-oT ;oica

c :CDEa._Om

iSC M

r ce

11111 cTO

T Di _OrsV

oica a

CDEQ .Oeueu" O OiC OC >J

1DmT :oe"oica

_CDEo .' S.siC M

..CO i n m o>CM i nCM i n en 'it-c oc

g

4 (3

1 C J)o i n

TOC D" O1 _o1ica o

Q )EC L.Peueu ordo

C OC N

1 C Oc^ ^

1Ocaoeos3_cEa .oCD O

O

Wo

TOO DT ^" Oco'oica D

CZCDEQ .oeueu

iC OC M

^ t M ( O CJ)C g O CO TO OOc m en C O C M ^ CNj ^J" C*\l

1H1^ H

1

1

1C DCOT 3ScCDa.O


8/31

1160 Social Forces m3)

o ?

G"cSo"tooE OO l L Uin

ID^QO

cEV )t un

Wo

COCD

r

ooo. aro(D> iCOO' 2OSOE

. E

S"

"o< oro Qc : oa3 LUint

o"oa> o"c(UEena>

inv

: go

O J

L O

oooX }(Hu~Oro" toeu0 )c :

cT

2X 15c :o"ra Qaiin

3o"G3-h ?^ 3

(DECOCtJinso

oLUoQ5. oro0 )CO

' ~COsenE

CO ou n r CM CO D mCO CO C> ( CO O r o C D '^['


9/31

G lo b a l iz a t io n a n d I n d u s t r i a l i z a t i o n 1 1 6 1

Figure 1

"ca>EpoEU J

!j-CM in if> h~-

5o9

roLU

8

2V ro


19/31

G l o b a l i z a t i o n a n d I n d u s t r i a l i z a t i o n 1 1 7 1Despite enormous changes in the global economy, the relationship between

economic development and manufacturing employment has some similaritiesCO eariy-industrialized countries. Although many developing countries are con-tinuing to industrialize, some such as South Korea and Malaysia are actuallydeindustriidizing as they continue to economically develop. In the models, GDPhas a highly significant effect in nearly all m odels while G D P square has a negativesignificant impact in some models. This indicates that manufacturing employ-ment increases in earlier levels of economic development and starts to decline athigher levels of econ om ic development. The m odels and the analysis of individualcases support the arguments made by Clark (1957[1940]), Rowthorn and Wells(1987), Rowthorn and Ramaswamy (1997) and Krugman and Lawrence (1994).This finding is important because it indicates that industrialization in developingcountries can be partially understood by looking to the industrialization processin early-industrialized countries, and predictions can be made based on the experi-ences of these countries. However, the level of economic development does notexplain all the variance in manufacturing emp loyme nt in developing coun tries.

Economic globalization was a salient influence on the share of manufacturingemployment in developing countries from 1980 to 2003. The size of exports,measured by the ratio of all exports to GD P, and the proportion of low-technologyexports among all exports has a strong positive effect on manufacturing employ-ment in the models. The effect of globalization on manufacturing employmentis mainly through international trade. Inward FDI stock has a negative impacton industrialization in some models, while FDI flow has no effect. FDI stock insecondary sector has a significant positive effect on industrialization in developingcountries when added to the models, while FDI flows in this sector has no effect.These suggest that direct investment in developing countries by Foreign com paniesmay be less important in the global reorganization of manufacturing than thetrade between these companies and the companies from developing countries.Dicken (2003) and Kaplinsky (2000) explain that most of global manufacturingis facilitated through subcontracting, in which firms from rich countries transfertheir manufacturing activities to firms in developing countries. Moreover, thesecompanies do not necessarily "own" their subcontractors and regularly shift be-tween different companies in different countries (Gereffi 2005). Finally, there isalso not m uch evidence for deindustrialization in developing countries as a resultof outward FDI from these countries.


20/31

1 1 7 2 S o c i f F o r c e s B { 3 ]One argument is about the quality of the manufacturing jobs created with

integration into the contemporary global economy. For example, Mander andGoldsmith (2001) argue that export-oriented industries exploit the workers indeveloping countries and do n ot provide a living wage. The images of third-worldsweatshops that attracted the attention of American university campuses in thelate 1990s are still very real (Gereffi 2005). In fact, many scholars of globalization,(e.g., Gereffi 2001; Kapnsky 2000), cite the low cost of production in develop-ing countries, originating from low labor comp ensation , and loose labor, tax andenvironmental regulations in these countries, among the main reasons behindthe global reorganization of manufacturing and the global mobility of the capital.In this manner, Arrighi, Silver and Brewer (2003) argue that although the gapin industrialization between first- and third-world countries has diminished, theincome gap still exists. However, some scholars argue that globalization mightactually have beneficial effects on workers. For example, Neumayer and de Soysa(2006) show that countries more open to international trade have fewer laborrights violations, while FDI does not seem to have any impact, be it positive ornegative.^' In addition, they argue that developing countries that have higherlevels of trade openness and FDI stock have lower levels of child labor forceparticipation (Neumayer and de Soysa 2005). Although significant, this debateis beyond the focus of this article, but warrants future research. Researchers canexpand this debate to assess a broader question of the relationships between glo-balization, industrialization and well-being in developing countries.

There are also other issues that the current study could not address. O ne imp or-tant question emerges from the near absence of industrialization in some countries,especially in Sub-Saharan Africa. These countries and the almost complete absenceof industrialization should be addressed separately in more detail. In addition,more research needs to be done as to the role of the service sector on economicdevelopm ent in developing coun tries. This and previous studies showed tha t theservice sector, rather than manufacturing, became the dominant form of employ-ment following the decline of agricultural employment in nearly all develop-ing countries. Finally, it would be valuable to examine partner concentration ininternational trade and investment. As suggested by some dependency scholars,dependence on a single or a few trade and investment partners can have significantconsequences for development and industrialization in developing countries.

Overall, this study contributes to current debates on globalization, and the


21/31

G l o b a l i z a t i o n a n d I n d u s t r i a l i 2 a t i o n 1 1 7 3factor, and domestic factors still shape industrialization and development. Finally,although economic globalization seems to result in spreading industrializationaround the world, the question of possible exploitation of developing countriesby rich countries still merits scholarly attention.Notes1 . Lall (2000) shows that from 1985 to 1998, the manufacturing exports of developingcountries increased 12.3 percent on average annually. He also shows that developingcoun try exports constituted 25 percent of all manufacturing exports in 1998, up from16 percent in 1985. My calculations from the World Trade Analyser (Statistics Canada2003) using Lalls (2000) classificacion shows that it was about 35 percent in 2003.

2 . I do nor mean to imply here that there is a consensus in social theory on theemergence of industrialization in developed countries. In fact, there have been seriousdisagreements and debate among scholars. For example, Mendels (1972) and Tilly(1983) argue that in contin ental Europe, unlike the factory-based industrializationin Britain, industrialization started in rural areas by the multiplication of smallproduction units, which they label as proto-industrialization. Sewell ( 1 9 8 6 ) and Perrot(1986) explain that in France, industrialization took place gradually with artisansplaying an imp ort an t role well Into the 20"'' century. Robinson and Briggs (1991 )found that 19''' centu ry industrialization in Indian apolis, Ind iana emerged fromartisan pro du ction . H owever, whatever path they followed, in all early-industrializedcountries the agriculture-based economies gave way to the industrial economies inwhich manu facturing became the m ain source of emp loym ent, except for the U niteStates in which manutactuting and service employment went hand-in-hand duringIndustrialization (Carter 1997). Then, in time, service sector employment increasedand took over manufacturing to become the main source of employment (Clark1957[1940l) .

3 . Rowthorn and Wells (1987), and Rovnhorn and Ramaswamy (1997) warn thatanalyzing deindustrialization in terms of the share of manufacturing in nationalincome can be misleading. They offer the concept of "positive industrialization"where the decline in tnanufacturing occurs when productivity grows at a rate higherthan the growth in output.4 . liiere is a rich literature on the internal factors leading to economic developmentand high productivity in developing countries. Most prominent are the studiesof institutional structures. Some scholars argued that central planning, control ofworkers and educational expansion by the developmental states led to increasingproductivity and economic growth is some countries, (e.g., Evans 1995; Wade 1990).

Some argued that culture played a crucial role in the successful industrialization anddevelopment of some developing countries by contribu ting to labor productivity and


22/31

1174 Social Forces B8{3)7. Nevertheless, Firebaugh {1996, 1992), Szymanksi (1983), and de Soysa and O neal

(1999) contest the claims of the depen dency school.8. Ca rdoso and Faletto (1979:xxii) state that "...p erip he ral indLtstrialization is based

on p roducts which in the center are mass consumed, but which are typically luxuriousconsumption in dependent societies. Industrialization in dependent economiesenhances income concentration as it increases sharp differences in productivitywithout generalizing this trend to the whole of the economy." Then they arguethat "The type of technology adopted by the most modern sectors used little laborand thus increased what seemed to be an overt incapacity to solve occupationaldem and through industrialization. The creation of new industrial sectors dismantledhandicraft ones, destroying more iobs than creating new ones."(Cardoso and Faletto1979: 4-5) Although Cardoso and Faletto's views do not fully represent dependencyand world system scholars after them, their argument indicates a possible negativeinfluence of dependency on manufacturing employment.

9. Skeptics of globalization reject the idea that the wo rld econom y in late 20''' cen turyand afterwards is different from earlier periods , specifically the late 19''' cen tury .Therefore, they argue against building any theoretical and empirical endeavor onthis assumption. Hirst and Thompson (1996) claim that developments labeled asglobalization are not historically unprecedented. They argue that integration andinterdependenceamongcountries was higher in the late 19'' 'century with more trade-to-national-output ratios and more open economies. Bairoch (1996) claims that thetrend in the volume of trade and FDI flows do not back the idea of globalization.Obstfeld and Taylor (2003) argue that foreign capital is now discouraged more thanit was a century ago. Following Robertson (1992), Held and colleagues (1999) andTherborn (2000), I perceive globalization as a long historical process, accepting thefeet that the integration of the world economy started before the late 20''' centurybut maintaining the idea that the current era has distinctive properties. Baldwin andMartin (1999) argue that trade/GDP, foreign direct investment/GDP and liberalismare qu ite similar between two periods, bu t the curre nt period is different becauseof the dramatic reduction in transportation and communication costs. Held andcolleagues (1999) think that the current era is distinct with its extensiveness, realtime and ro und the clock economic transactions. Dicken (2003) says that unlike theshallow integration o the earlier periods, the current global economy (post-WWlI) ischaracterized by ic fimctional integration of economic activities.

10. HO basically contends that the relative abundance of factors of production (land,labor and capital) creates the comparative advantage of a country. An extension ofthis model is the Heck scher-Ohlin-Sam uelson Ih eo re m , which theorizes factor priceequalization as a result of trade between two countries (Rodrik 1997).

11. Wood (1995). however, stresses that the developing countries need to provide at leastbasic levels of education to their labor forces in order to utilize their comparativeadvantage.


23/31

Globalization and Industrialization 117513. Developed countries are not Includeci in the sample because the changes in thesecountries are well documented.14. Argentina had a GDP per capita of more than $5,000 in 1980, but that figure fell in

following years. Thoug h Singapore rose to a very high level of economic developm entat [he beginning of 1980, its G D P per capita was below S5 ,000. H enc e, it is essentialto inclLide in any sample the countries that were able to pull themselves out of thedeveloping coun try category. 7b my know ledge, there is not a standard definition of"developing countries." I used $5,0 00 dollars G D P per capita assuming that countriesover this benchmark had achieved significant economic development. The countrieswith populations of less than 500,000 were not included in the sample because theymay not be comparable as units of analysis.

15. The countries in the sample are Algeria, Angola, Argentina, Bangladesh, Benin,Bolivia, Brazil, Burkina Faso, Cameroon, Central African Republic, Chad, Chile,Colom bia, Co ngo D emocratic Republic, Con go Republic, Costa Rica, Cote d'lvorie,Dominican Republic, Ecuador, Egypt, El Salvador, Fiji, Gabon, Gambia, Ghana,Guatem ala, Ho ndu ras, India, Indonesia, Iran, Jamaica, Kenya, Madagascar, Malaysia,Mali, Mauritania, Mauritius, Mexico, Mozambique, Myanmar, Nepal, Nicaragua,Pakistan, P anama, Papua New Gu inea, Paraguay, Peru, Philippines, R wanda, Senegal,Sierra Leone, Singapore, South Korea, Sri Lanka, Sudan, Thailand, Togo, Trinidadand Tobago, Turkey, Ugand a, Uruguay, Venezuela, Yemen and Zam bia.

16. Countries that are still governed by communist parties, China and Vietnam, are alsotreated as ex-communist countries. The results and conclusions are robust if Ch ina andVietnam are excluded from the ex-communist category and included in the sample.

17. The coun tries with available data for each year change because of missing data. W he nI adjust this for countries with available data for all years, the mean is 19.8 percentin 1980 and 23 percent in 2003 .18. 1 ran the models both with GDP PPP per capita and GDP per capita (World Bank2007) and the results were basically identical. Although PPP is not an ideal measure,it may have some reliability advantage for cross-country comparisons because it takes

into account the differences in cost of living.19. One might argue that the age structure instead of population growth may be moreimportant here. The results were robust when I substituted population growth withpopulation under age 15, between ages 15 and 65, and the ratio of population under15 to population between 15 and 65.20. Enrollment race is calculated by the World Bank (2007) as the ratio of all the studentsin secondary schools, regardless of age, to the total number of people at secondaryschool age.2 1 . I also used the portion of labor force with secondary education as provided by theWorld Bank (2007) to measure education. However, because of missing data the


24/31

1 1 7 6 S o c ia l F o r c e s 8 B { 3 ]medium-technology (MT) and high-technology (HT) products. The trade data isclassified into Lalls (2000) groups at the three-digit level of Standard InternationalTrade Classification (SITC) using UN international trade data through World TradeAnalyzer (WTA) (Statistics Canada 2 003 ). UN 's C O M T R A D E Database is also usedto supplement WTA when necessary (United Nations 2005).

24 . In analyses available upon request, I also included raw material exports into themodels without subtracting oil and gas exports. The results were very similar.

25. Foreign direct investment is measured as the ownership of 10 or more percent of aneconomic establishment by a foreign entity (UNCTAD 2005).

26 . By contrast, Firehaugh (1992) critiques the conclusions of dependency scholarsregarding FDI. It Is important to emphasize that Firebaugh's critique should notnecessarily be applied to manufacturing employment. Because growth and GDP arenot dependent variables here (and are controlled for), the debate over denominatoreffects should be less of a concern.

27 . Thirty-one countries in the sample have an outward FDI stock larger than 1 percento ft h e ir G D P in the latest year with available data, while 11 countries have mo re than5 percent. '

28 . The results of these analyses can be found at http://www .uncw.edu /soccrj7 abuut-faculty-kaya.htm !. In these models, I also present the variance inflation factor values.The VIF values range from 1.373 to 4 .4 25 w ith an average of 2.3 34 . These suggestthat there is not a significant collinearity problem among the independent variables.

29. Another issue is the possible existence of endonegeity and simultaneity among thevariables, which is always a concern with this kind of research. Although, it is notpossible to fully address these conce rns, a few things can be said. First, I utilize severalstatistical techniques to estimate the models. In particular, FE models (and FE-ARl models) are considered a more stringent approach against reverse endogeneity(Winship and Morgan 1999). As for the relationship between economic globalizationvariables and industrialization, there is enough evidence in the literature to suspectthat economic globalization (FDI and trade) may precede and affect the level ofmanu facturing em ploymen t (e.g.. Wo od 1995 ; Brady and D enniston 200 6 ; Villarealand Yu 2007) rather than the opposite.30. I also ran OLS with Panel Corrected Standard Error models as suggested by Beckand Katz (199 5). The results of the PC SE m odels are generally similar to the FE an dRE models. However, the unbalanced nature of my data constitutes a problem forrunning PCSE models. Because of missing data, many countries in the analyses havedata for a few of the six time points; and there is not a time point common to allcountries. In addition. Beck and Katz (1995) warn against using their model with

less than 10 observations.31. If I only run the linear term, the model fit is significantly lower and theeffect of GDP,


25/31

G l o b a l i z a t i o n a n d I n d u s t r i a l i z a t i o n 1 1 7 7ReferencesAJderson, Arthur S. 1997. "Globalization and Deindustrialization: Direct Investment

and the Decline of Manufacturing Employment in 17 OEGD Nzons." Journal ofWorld-Systems Research 3( I ) : 1 - 3 4 .. 1999. "Explaining Deindustrializacion; Globalization, Failure, or Success?"

American Sociological Review 64(5):701 - 2 1 .Amsden, Alice H. 20 01 . T h e Rise of the Rest. Oxford University Press.Arrighi, Giovanni, Beverly J. Silver and Benjamin D. Brewer. 2 0 0 3 . "Industrial

Gonvergence, Globalization, and the Persistence of the No rth-So uth Divide." Studiesin Comparative International Development 3S{\):5-31.

Auty, Richard M. 2000. "How Natural Resources Affect Economic Development."Development Policy Review 18:347-64.

Bairoch, Paul. 1996. "Globalisation Myths and Realities: One Century of External Tradeand Foreign Investment." Pp. 173-92. States Against M arkets. Robert Boyet andDaniel Drache, editors. Routledge.

Baldwin, Richard E., and Ph ilippe M artin. 1999 . "Two Waves of Globalization: SuperficialSimilarities, Fundamental Differences." Pp. 3-58. Globalization and Labor. HorstSiebert, editor. Inscitutut fur Welwirtschaft an der Univesitat Kiel.

Baltagi, Badi H., and PingX .Wu. 1999. "Unequally Spaced Panel Data Regression withAR(1) Disturbances." Econometric Iheory 15(6):814-23.Beck, Nathaniel. 2001. "Time-Series-Cross-Sect ion Data: What Have We Learned in thePast Few Years." Annual Review of Political Science 4:271-93.

Beck, Nathaniel, and Jonathan N. Katz. 1995. "What To Do (and Not To Do) withTime-Series Cross-Section Data." American Political Science Review 89(3):634-47.

. 20 01 . "Throwing O ut the Baby with the Bath W ater." International Organization55(2):487-95.

Bollen, Kenneth A., and Stephen J . Appold. 19 93 . "National Industrial Structure and theGlobal System" American Sociological Review 58(2):283-301.

Botnschier, Volker, Christopher Chase-Dunn and Richard Rubinson. 1978. "Cross-National Evidence of the Effects of Foreign Direct Investment and Aid on EconomicGrowth and Inequality: A Survey of Findings and Reanalysis." American Journal ofSociology S4i2):65l-83.

Bornschier, Volker, and Christopher Chase-Dunn. 1985. Transnational Corporations andUnderdevelopment, Praeger.

Boswell, Terry, and William J.Dixon. 1990. "Dependency and Rebellion: A Cross-National Analysis." American Sociological Review 55(4):540-59.

Brady, David. 2003. "The Poverty of Liberal E nom ics." Sodo-Economic Review 1 (3):369-409.Brady, David, and Ryan De nnis ton. 2006. "Economic Globalization, Industrialization and


26/31

1178 Social Forces 8B{3)Ch en, Tain-Jy, and Y ing-Hua Ku. 2003 . "The Effects o f Overseas Investment on Dome stic

Employmem" National Bureau ofEconomic Research Working Paper 10156. Availableat: http://www.nber.org/papers/wl0156.pdf.Chase-Dunn, Christopher, and Peter Grimes. 1995. "World-Systems Analysis." AnnualRemen/ of Sociology 2\-3^7-417,Chase-Dunn, Christopher, Yuki Kawano and Benjamin D Brewer. 2000. "TradeGlobalization since 1795: Waves of Integration in the World-System." American

Sociological Review 65(1):77-95.Clark, Colin. 1957[1940l. The Conditions of Economic Progress. Macmillan.Collier, Paul, Lani Elliot, Hvard Hegre, Anke Hoeffler, Marta Reynal-Querol andNicholas Sambanis. 2 0 0 3 . Breaking th e Conflict Trap: Civil War and DevelopmentPolicy. Oxford University Press.De Soysa, Indra, and John R. Oneal. 1999. "Boon or Bane? Reassessing the Productivityof Foreign Direct Investment." American Sociological Review 64(5):766-82.Dicken, Peter. 2003 . Global Shifi: Reshaping the Global Economic Map in th e 21" Century,4"' Edition. Guilford Press.Dodzin, Sergei, and Athanasios Vamvakidis. 1999. "Trade and Industrialization inDeveloping Agricultural Economies," IMF Working Paper, WP/99/145. Washington,DC: International Monetary Fund. European II and Research Departments. Availableat: http://vvn^vw.imf.org/external/pubs/ft/wp/1999/wp99145.pdf.

Evans, I^ter. 1979. "Beyond Center and Periphery: A C om me nt on the Contribu tion of theWorld System Approach to the Study of Developm ent" Sociological Inquiry 49(4): 13-20.. 1995. The Embedded Autonomy: States and Industrial T ransformation. PrincetonUniversity Press.I-ircbaugh, Gl enn . 1992. "Growth Effects of Foreign and D om estic Investment." KmericanJournal of Sociology


27/31

G l o b a t i z a t io n a n d I n d u s t r i a l i z a t i o n 1 1 7 9Goldsmith, Edward, and Jerry M ander. 20 01 . T h e Case Against the Global Economy: And

Fora Turn Towards Localization. Earthscan Publications.Halaby, Charles N. 2004. "Panel Models in Sociological Research: Theory and Practice"

Annual Review of Sociology 30:507-44.Held, David, Anthony G. McGrew, David Goldblatt and, Jonathan Perraton. 1999.Global Transformations. Stanford University Press.

Hirst, Paul, and Graham Thompson. 1996. Glohalization in Question. Polity Press.Hoogvelt , Ankie. 1997. Globalization and the Postcolonial World. Johns Hopkins

University Press.Hsiao, Chen g. 2003. Analysis of Panel Data, 2 " ' ' Edition. Cambridge University Press.Inkeles, Alex, and David H. Smith. 1974. Becoming Modern Individual Change in S ix

Developing Countries. Harvard University Press.Jorgenson, Andrew. 2006. "The Transnational Oi^ ni zat ion of Pro duaion and Environmental

Degradation: A Cross-National Study of the Effects of Foreign Capital Penetration onOrganic Water Pollution Intensity, 1980-1995." Social Science Quarterly 87(3);711 - 3 0 .

. 2007a. "Does Foreign Investment H arm the Air We Breathe and the Water We Drink?A Cross-National Study of Carbon Dioxide Emissions and Organic Water Pollution inLess-Deveioped Countries, 1975 to 2000." Organization & Environment 20(2); 137-56... 2007b. "Foreign Direct Investment and Pesticide Use Intensity in Less Developed

Co untries: A Quan titative Investigation." Society and Natural Resources 20( l ) :73-83.Jorgenson, Andrew, Christopher Dick and Matthew C. Mahutga. 2007. "ForeignInvestment Dependence and the Environment: An Ecostructural Approach." Social

Problems 54i3): 571-')4.Kaplinsky, Raphael. 2000. "Globalization and Unequalisation: What Can Be Learned

from Value Chain Analysis" The Journal of Development Studies 37(2):117-46.Kentor, Jeffrey. 2001. "The Long Term Effects of Globalization on Income Inequality,

Population Grovrth, and Economic Development." Social Problems 48(4):435-55.Kentor, Jeffrey, and Terry Boswell. 2003. "Foreign Capital D ependence and Developm ent:

A New Direction." American Sociological Review 68(2):301-13.Kerr, Clark. 1983. V } e Future of Industrial Societies: Convergence o r Continuing Diversity?

Harvard University Press.Kerr, Clark. John T. Dunlop, Frederick Harbison and Charles A. Myers. 1960.

Industrialism and Industrial M a n : ' I h e Problems of Labor and M anagement in EconomicGrowth. Harvard University Press.

Kohli, Atul. 200 4. State-Directed Development: Political Pow er and Indu strialization in theGlobal Periphery. Cambridge University Press

K o o , Hagan. 1990. "From Farm to Factory: Proletarianization in Korea." AmericanSociobgical Review 55(5):669-81.Krug man , Paul R., and R obert Z . Lawrence. 1994 . "Trade, Jobs and Wages." Scientific


28/31

1 1 8 0 S o c i a l F o r ces ZB {3 ]Martin, Nathan, and David Brady. 2007. "Workers of the Less Developed World Unite?

A Multi-Level Analysis of Unionization in Less Developed Countries." A m e r i c a nSociological Review 72{4):562-S4.

Mendels, Fr ank lin. 1 972 . "Proto-indtistrializadon: The First Phase of the Ind ustriahzationProcess." J o u r n a l o f Economic History 32( 1 ) :242-61 .Moore, Wilbert E. 1965. T h e Impac t o f Industry. Prentice-Hall.Moore, Wilbert E., and Arnold S. Feldman. 1960. L a b o r C o m m i tm e n t a n d Social Change

i n D e v e l o p i n g A r e a s . New York, NY: Social Science Research Council.Nee, Victor. 1 98 9. "A Theory of Market Transition: From Redistribution to Markets in

State Socialism" A m e r i c a n Sociological Review 54(5) :663-81 .Nielsen, Franois, and Arthu r S. Alderson. 1 995. "Income Inequality, Developm ent, and

Dualism: Results from an Unbalanced Cross-National Panel." A m e r i c a n SociologicalReview m%(y74'lQ\.

Neum ayet, Eric, and Indra de Soysa. 20 0 5. "Trade Openn ess, Foreign Direct Investmentand Child Labor." World Development i^iiyAi-Gi.

. 20 0 6 . "Glob alization and the Right to Free Association and Collective Bargaining:An Em pirical Analysis." World Development 34{ l)-3\-49.

Organisation for Economic Co-O peration and Development. 20 0 1 . I nt e r n a t io n a l D ir e c tInvestment Statistics Yearbook 1980-2000. Paris, France: OE C D Publications.

Obstfeld, Maurice, and Alan M. Taylor. 2 0 0 3 . "Globalization and Capital Markets." Pp.12 1 - 89 . Globalization i n H is t o r i c a l P e r s p e c t i v e . M ichaelD. Bordo, AJan M .Taylor andJeffrey G. Williamson, editors. University of Chicago Press.

Perrot, Michelle. 1986. "On the Formation of French Working Class, 1789-1848." Pp.7 1 - 1 1 0 . W o r k i n g Class F o r m a t i o n . Ira Kaznelson and Aristide Z. Zolberg, editors.Princeton University Press.

Fortes, Alejandro, and Bryan S. Rob erts. 20 0 5. "The Free-Market City: Latin AmericanUrbanization in the Years of the Neoliberal Experiment." S t u d ie s in Co m p a r a t iv eI n t e r n a t io n a l Development 40 ( I ):43-82.

Raftery, Ad rian. 1 99 5. "Baycsian M odel Selection in Social K e s e a i c h . " SociologicalMethodology 25:111-65.Rober tson, Roland. 1992. G l o b a l i z a ti o n : S o c i a l T h e o r y a n d G l o b a l C u ltu r e . Sage

Publications.Rob inson, R obert V , and C arl M. Briggs. 1 991 . "The Rise of Factories in Nin eteenth-

Century Indianapolis." A m e r i c a n J o u r n a l o f Sociology 97(3)'.622-56.Rodrik, Dani. 1997. H a s G l o b a l i z a ti o n G o n e T oo /ar. ' 'Washington, D.C.: Institute for

International Economics.Rowthorn, Robert , and Ramana Ramaswamy. 1997. "Deindustrialization: Causes

and Implications." W o r k i n g Paper o f t he I n te r n a t io n a l M o n e ta r y F u n d A p r i l 9 7 /4 2 .Available at: http://www .imf org/external/pubs/ft/wp/wp 9742 .pdf.


29/31

G l o b a l i z a t io n a n d In d u s t r ia l i z a t io n 1 1 8 1

Stark, David. 1992. "Path Dependence and Privatization Strategies in East CentralEurope." East European Politics an d Societies 6( l ) :17-53 .

Statistics Canada. 2003. World TradeAnalyzer. CD -Ro m. Ottawa, On tario: Statistics Canada.Syzmanski, Albert. 1983 . "C om me nt on Bornschier, Chase-D unn , and Rubinson."Am erican Journal of Socio/ogy S9O):690'94.Thcrborn, Goran. 2000. "Globalizations; Dimensions, Historical Waves, Regional Effects,

Normative Governance." International Sociology 15(2):151-79.Tilly, Charles. 1983. "Flows of Capital and Forms of Industry in Europe, 1500-1900."

Theoretical Sociology 12:123-42.United Nations. 1992, 1994, 1996, 2000, 2 0 0 3 , 20 0 4 . World Investment Directory

(Volumes 1-9). New York, NY: United Nations.. 2000. An Investment Guide t o Bangladesh: Opportunities and Conditions. New York,

NY: United Nations.. . 200 5. UN Commodity Trade Statistics Database (U N Comtrade). Available at: h ttp ://

unstats.un.org/unsd/comtrade/default.aspx.U N C T A D . 2 0 0 5 . EDI Database. Available at: http :/ /s tats .un ctad .org /fdi/e ng /

ReportFolders/Rfview/Explorerp.asp?CS_referer=... 200 8. FD I C oun try Profiles. Available at: http://www.un ctad.org/Temp lates/Page.

asp?intltemID=3198&lang= 1 .Vilhirreal. Andres, and Wei-hsin Yu. 2007. "Economic Globalization and Women's

Employment: '^Ihe Case of Manufacturing in Mexico." American Sociological Review72(3):365-89.Wade, Robert. 1990. Governing t h e Market: Economic Theory an d t h e Role of Government

in E ast Asian Industrialization. Princeton University Press.Wallerstein, Immanuel. 1974. T h e Modem World-System, Volume I : Capitalist Apiculture

and the Origin of h e European World-Economy in t h e Sixteenth Century. Academic Press.. 1979. Ihe Capitalist World-Economy. Cambridge University Press.. 1980. T h e Modem World-System, Volume IT Mercantilism an d t h e Consolidation of

the European World-Economy, 600-1750. Academic Press... 1989. T h e Modern World-System, Volume III: Vje Second E r a of Great Expansion of

the Capitalist Wo rld-Econom y, 730-1840s. Academ ic Press.Winship, Christopher, and Stephen L. Morgan. 1999. "The Estimation of Catisal Effects

from Observational Data." Annual Review of Sociology 25:659-706.Wood, Adrian. 1994. North-South Trade, E mploym ent and Inequality. Clarendon Press.

. 1995. "How Trade Hurt Unskilled Workers." The Journal of Economic Perspectives9(3);57-80.

W ooldridge, Jeffrey M . 2003 . Introduction to Econom etrics. MIT Press.World Bank. 2007. Worhi Developm ent Indicators Online. Available at: http://devdata.worldbank.org/dataonline/.


30/31

1 1 8 2 Social Forces 8B{3\

a. ^

CD

CU

gEmpom

CZ5' ' ""^

CD

CZ )' ^

CD CMC DCD CO C O t

O ^

C M

T

t oC D

C DO O

CD

O

C D

C MC M^

i n CM

to COT co

cot -

C D

O OC O

rc oi n

C D

i nt=> CD

O O

1 ^C M

11

co

CD

11

C O' ^

C D

i nCM

-0i n

c o -a-CN CM

o11

C M

11

p

-2

11

coC DC DCM

11

~CM C N C 3 c oC O

C Dm O in o t=>c o l OO

CM CO cn CO rC Dl O

T ~

C DCDT - CD t o ^ ^t o t o C N C N C M CM

C N C M C O O O

unOO T T

m r-- - ^

ome

C D

me

C O

T

C O

CD

.,

rC D

C D r -

C Dc:^O

CM CO m

C O

i nT

CM CO e> t oC M

no LXLU"r

sa%o

T o

OfGDP

%oGDP

^

C D

OfGDP

CD

C D

U OT

C D

C D

C DC Oc y io

CMC35C D

O

1

C M c e

C M i n

CD OO

C D

^ "

c o c o

o

CM

O"G03

1

O

C D

(J >CD

t oT

CD CDC MC D

CO r-~o oC MCD CD'

OfGDP

mayS y

S

maySo

c

vS


31/31

Copyright of Social Forces is the property of University of North Carolina Press and its content may not be

copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written

permission. However, users may print, download, or email articles for individual use.

Documents

Globalisation and Indutrialisation in 64 Developing Countries