Creating Productive Capacities, Employment and Capabilities for Development: The Case of Infrastructure Investment

Abstract

An emerging debate in development economics is shifting attention away from the quantity of growth towards productive transformation and the dynamics of the growth process. Structural and technological change are being discussed, along with social capabilities, as a source of productivity and job growth, poverty reduction and an improved standard of living. The experience of the successful catch-up countries in Asia confirms that these countries achieved high and sustained growth through a process of structural change, job creation and rapid technological learning. Experience also shows that government interventions promoted manufacturing and industrial development, exports, the upgrading of technologies and high learning effects through education, training and experience in industries. The Commission on Growth and Development (2008), therefore, concluded that if an economy is failing to diversify its production structure and exports or to generate

[A] successful development process and a country’s rising level of incomes ... should be based on superior knowledge, embodied in technologies and institutions, rather than simple command over resources ... and we need a view of development which is based on ... a vision of transformation in productive structure (and the development of social and technological capabilities that are both the causes and the consequences of such transformation).

(Chang 2010: 2)¹