Competitiveness, Skill Formation and Industrialization: The South Asian Experience

Abstract

Global economy is steadily moving towards the fourth industrial revolution (4IR). The 4IR is changing the nature of economic activities, organizations, businesses, institutions and the lives of the people across the globe (Schwab 2017). Historical experience of the industrially advanced countries and more recently the newly industrializing countries of East Asia show that the industrialization has remained the engine of economic growth and development. The industrialization has transformed the sources of livelihood of the people and sustained institutional changes. The spread effects of industrialization have also impacted on the structural and institutional changes across the countries. The central dynamic force behind the industrial revolution has been epochal innovation (Kuznets 1966), and each industrial revolution has its own distinctive innovation. The newly industrializing countries of East Asia also have unique innovations to catch-up with the advanced countries (Lee 2013). The technological innovations not only change economic activities but also undergo dramatic skill requirements. The technological innovations to succeed require suitable institutional changes and human capital formation. Where these conditions are not fulfilled, the industrial revolution either has not happened or distorted economic development. However, the industrial revolution in some parts of the world does affect the rest of the world in several dimensions. Even with the low level of development, the most of the developing countries are witnessing a trend towards high-tech industrial development and that also reflected in terms of increasing share of trade in high-tech manufacturing commodities (UNIDO 2015).