Paper short abstract:

In this paper we conceptualize linkages between structural change and digitalization and draw conclusions for industrial policy making in low and middle income countries.

Paper long abstract:

It remains unclear whether or not developing countries can achieve economic prosperity through industrialization in the same manner as developed countries did. At the same time, developing countries place great hopes on digital technologies to drive structural change in the economy and create manufacturing employment. However, there remain a lot of unknowns with regards to the economic impacts of digitalization. Moreover, digitalization is rarely being discussed against the backdrop of structural change.

With regards to industrial policy making, the uncertainty surrounding both structural change and digitalization make it a difficult task for policy makers to provide adequate guidelines and design suitable policies. It becomes an even greater challenge to harmonize the different policy fields of technological and economic development. Broader societal goals related to sustainable development add to the complexity of the issue. For instance, as the prospects of industry are doubtful, new trajectories of structural change are considered and the role of services to foster economic prosperity and achieve lower-carbon development are discussed. In this paper, we aim to contribute towards a better understanding of the relationship between structural change and digitalization by conceptualizing linkages between structural change and digitalization. Our analysis should foster a dialogue on risks and opportunities of digitalization related to structural change in developing economies. It particularly addresses policy makers in order to facilitate better design and implementation of industrial policies in the face of digitalization.