Bypassing the Manufacturing Stage of Development
To understand the topic at hand, it is important to understand the typical model of economic development. As this process begins, agriculture is the primary driver of any nation’s economy. The extraction and export of valuable resources such as petroleum and minerals usually coincides with this period, or follows shortly thereafter. As technology advances within the country, the manufacture of finished goods – first textiles, then heavier goods – becomes a larger and larger part of national economic output, ideally helping to spur large-scale investments in infrastructure (although this is not always the case). At this manufacturing stage, production becomes mechanized to promote efficient working environments, frequently making use of external funds and export proceeds to stimulate investment and growth. As the economy grows, industry begins to diversify, with the general wealth of the nation increasing. With the growth of national wealth comes the creation of a consumer class, which becomes the driving force of the economy. Consumption of material goods by local citizens helps to strengthen manufacturing. However, the expansion of national wealth eventually brings with it a demand for services, which begin to displace manufacturing, leading to a greater reliance on imported goods. In this consumer-driven stage, the economy becomes focused on offering services that typically cannot be offered from other locations.
The UNDP will discuss the growing possibility of countries bypassing the manufacturing stage of development, and the greater frequency with which this takes place. Some nations have begun to take a different route to development that moves more directly from an agrarian system to a greater focus on offering services, relative to the production of manufacturing goods. Nations which have begun to focus on a service-driven economy may still engage in manufacturing, yet at a reduced scale, in favor of technical support or tourism. The poster child for this model is India, which moved into services – technical support in particular – earlier relative to its level of development than most industrialized nations did in the past. The prevalence of this system has increased as technological advancements have allowed outside countries to offer services that traditionally had to be offered locally. These industries include customer service phone lines, technical support, and tourism industries that can now be outsourced, thanks to advances in global communication and travel.
We must examine the ramifications of this new model. One should consider the demographic sectors that may be left behind without the spread of wealth offered by the manufacturing stage. Each delegate should bear in mind that the goal of the committee is to promote sustainable development for all nations by “focusing on opportunities to reduce poverty and marginalization in ways that are sustainable from economic, social, and environmental standpoints (UNDP).”In some cases, service industries are less likely to hire unskilled workers than manufacturing sectors, which means that unless educational attainment is broadly and evenly distributed throughout the population, bypassing manufacturing exacerbates social divisions between rich and poor. An absence or shortage of manufacturing employment could spur the creation of an unemployable underclass, forced into informal work and unable to share in the benefits of economic progress. On the other hand, a greater focus on services at the expense of manufacturing may moderate a country’s greenhouse emissions, which would be beneficial. Since this new development paradigm can have both positive and negative consequences, we must examine both, see if it is possible to offset the latter, and determine if proceeding directly to a service economy constitutes a viable path toward sustainable development.