Global industrial sector which includes mining, manufacturing and utilities expanded by 2.3% in 2022. The most active among them was manufacturing, which rose by 3.2 percent, whereas mining and utilities sectors drooped by 0.9 percent. In 2023, the industrial development was under pressure of numerous negative factors. Whereas manufacturing took a worldwide lead in growing industries, mining and utilities were the greatest contributors in low-income economies.
Global manufacturing has exhibited, in recent years, the so-called dual decoupling. On the one hand, manufacturing activities and carbon emissions have experienced positive decoupling, because the production keeps increasing but the emissions are held comparatively constant. Conversely, a negative decoupling has occurred between manufacturing output and employment on the other hand, that is, the growth in manufacturing output has not resulted into additional job opportunities. This has especially been the case with female employment in manufacturing that has been on the decrease, a phenomenon that the pandemic has made worse.
The world manufacturing industry is altering as well and some relocation of industries is being observed. The high-income economies manufacture industry is moving to the middle-income economies, and also out of North America and Europe, into Asian and Oceania. This trend has been speeded up by the pandemic crisis.
Meanwhile, the role of high-tech industries in the manufacturing industry is growing. Such industries have picked up at a quicker pace after the pandemic and are continuing to grow dynamically, whereas the low-tech industries have stagnated. This detour may also increase disparities within and among countries.
Progress on United Nations Sustainable Development Goals (SDGs) has been achieved since 2015 by all regions and country groups, except high-income industrial economies and Latin America & the Caribbean. Nevertheless, the general rate of the progress is too slow to meet global SDGs by 2030.
In terms of innovation, Europe, East Asia and North America have the most innovative economies in the world. Nevertheless, statistical efforts should be reinforced further in order to gauge in detail manufacturing innovation, its dynamo, barriers, and effects and to give important indicators useful in policymaking.
The Manufacturing Value in Various Economies.
1.1 Manufacturing as Primary Agent of Industrial Development
The manufacturing value added occupies a prominent place in most countries, particularly those with middle and high income economies. In the meantime, the industrialization is one of the most anticipated development policies of least developed countries.
In low income economies the contribution of mining and utilities sector to the growth of the industry is higher since these sectors are heavily dependent on resources. These industries are very essential in their economies.
Fig 1 shows the input of various regions towards industrial growth which indicates the differences in industrial structure amongst regions. These vary with the varying levels of economic development and industrial organization the world over.
1.2 Balance of Manufacturing Trade across various Economies.
The balance of trade in manufacturing implies the distinction between the aggregate exports and aggregate imports of manufactured products of a country or of a region. Trade surplus (when exports are more than imports) usually shows that the manufacturing industry is competitive in the international market, whereas trade deficit (when imports are more than exports) might be an indication of dependence on goods produced abroad.
As another instance, manufacturing industry of China has been very competitive in the international market, and the country has had a long-term trade surplus. Nevertheless, as the global economic environment and domestic economic structure are changing, issues of increasing labor costs and international trade friction can exert some influence on the manufacturing trade balance of China.
Figure 2 shows disparities in the balance of manufacturing trade amongst economies. Certain industrialized economies display the most trade deficits relative to their GDP, depicting big disparities in their manufacturing trade. In low-income economies, trade deficits (in manufacturing) are of particular concern. Such economies might not have the appropriate industrial capability and technological development to manufacture and export products of high-value added manufactured goods which result in trade deficits.
The existence of a trade deficit in manufactures may adversely affect the economy, amongst others, by decreasing the foreign exchange reserves, making the economy susceptible to external economic shocks. In the case of low-income economies, such deficits can constrain the potential of the economic growth and development.
2. The Trends in Manufacturing Development in the World
2.1 Trends in Relocation of Manufacturing relocation
The manufacturing production is moving out of industrial economies in Europe and North America to Asia. This important trend of manufacturing relocation across the globe is captured in figure 3. This change is indicative of a geographical rebalancing of the manufacturing industry, where the Asian contribution to global manufacturing value added (MVA) rose considerably. The trend carries significant options in the global economic scenario and regional economic development strategies.
The figure shows squares that represent percentage of global MVA where each square is equal to 1 percent of the global manufacturing value added. The figure indicates that the contribution of Asia in the world manufacturing is increasing gradually, whereas that of Europe and North America is comparatively decreasing. Lower labor costs, greater market sizes, and Hamb Grab as some of the main reasons behind this relocation trend.
2.2 Decoupling of Manufacturing Production and Employment
Figure 4 shows that the manufacturing production has not led to employment opportunities despite its increase. This is an indication that the growth of efficiency of production and automation might have diminished the requirement of human labour, and that manufacturing output and employment have become decoupled. This phenomenon poses dilemma to policy makers on balancing act between economic growth and job security.
This change may result in drastic effects on the labor markets especially in economies whose manufacturing sector is prominent. On one hand, productivity and output are rising, however, stagnant job growth can create fewer jobs, particularly in low-skill jobs.
2.3 The Fall of Women in Manufacturing Work
The past few years have experienced a downward trend in the employment of females in manufacturing especially during the pandemic (Figure 5). Women were disproportionally impacted by the pandemic-related economic uncertainty and its effects on particular industries, including hospitality and service work, retail, and childcare. The industries that were more concentrated with women like services and retail were severely hit and hence the women unemployment rates increased.
Also, some women might have been compelled to leave the labor force due to increased family responsibilities during the pandemic. Gender inequality that has prevailed in international manufacturing requires policy measures that will facilitate the employment of women in the industry and alleviate the challenges that the pandemic has presented.
Figure 5: Female Employment in Manufacturing on the Decline
2.4 High-Tech Industries and their Growth in Manufacturing
It is an international tendency because the role of high-tech industries is increasing in the sphere of manufacturing. These sectors are growing and their influence on the world economy is also growing. The trend is likely to further lead to technological innovation and economic growth as well as the widening of disparities across nations and regions.
The Growing Significance of High-Tech Industries
The figure 6 shows the evolution of high-tech industry in manufacturing value added. Such industries are computer, electronics, optics, chemicals, machinery, motor vehicles, electrical equipment and material-handling equipment such as bridge cranes. The data shows that the high-tech industries have considerably extended their contribution to manufacturing value added between 2001 and 2021, which reveals the worldwide movements towards high-tech manufacturing.