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Paper short abstract

Synthesising the dependency-developmental state debate and recent empirics, this paper shows universal "thick" industrialisation is impossible due to a fixed global manufacturing share. Rational national policies in a finite industrial space create overcapacity and "thin" industrialisation.

Paper long abstract

For decades, the dependency theory literature has emphasised the structural constraints that limit industrialisation possibilities for the global periphery. High development theory and the later developmental state literature, in contrast, took the possibility of universal industrialisation as given. Since William Cline's “manufacturing fallacy of composition,” parallel literatures have emerged which allude to structural constraints, including Brenner's analyses of global overcapacity in 2006, the middle-income trap from 2007, "premature deindustrialization" from 2015, "thin industrialization", and empirical evidence since 2016 that the global manufacturing share of output and employment has remained fixed at approximately 14% and 16-17% since 1970.

The paper synthesises the literature, taking both a historical and a light quantitative approach. The first insight is a historical contextualization, whereby the fundamental transformations in product and process innovation, combined with income growth, enabled the manufacturing share of global GDP to rise since the early modern period, and a small group of countries were able to undergo "thick industrialisation" while other countries neglected industrialisation or were forcefully compelled to avoid industrialisation. Decolonisation was the beginning of an era of universal efforts to industrialise (UEI) at the same time that the manufacturing share of global GDP might have plateaued. Thirdly, a simple allocation model demonstrates that, given this stable global share, the majority of countries cannot all simultaneously achieve “thick” industrialisation. Under UEI, the universal pursuit of industrial policy may be framed as a multi-player Prisoner’s Dilemma, where individually rational strategies generate a collectively suboptimal equilibrium of overcapacity and “thin” industrialisation.