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Service-sector jobs will grow rapidly even in the lowest-income countries, researchers project
WASHINGTON – There will be fewer manufacturing workers in 2050 than there are today, and even in poor countries manufacturing job growth will stagnate, according to a new study released today by the Center for Global Development. China may be an exception, further expanding its share of global manufacturing jobs to 43% of the total by 2050.
Researchers at the global think tank modeled global growth through the year 2050 and projected changes in the sectoral composition of the economies of 59 countries, which account for about three quarters of the world’s GDP and population.
The researchers project that even in today’s lowest-income countries, the number of manufacturing jobs will barely keep pace with population growth over the next thirty years, and manufacturing is likely to remain a small part of most of these countries’ economies. Instead, they find that service sector jobs will expand rapidly in even very poor countries like Bangladesh and Ethiopia.
“There’s still a popular idea that low-income countries will progress naturally from being dominated by agriculture to manufacturing-led growth, but mounting evidence suggests that’s not going to happen. We think that farms are going to empty out across Africa and Asia in the coming decades, but people are likely to flood into offices and shops, not factories,” said Charles Kenny, a senior fellow at CGD and an author of the study.
“This doesn’t mean that poor countries will never escape poverty. New technologies and the shift to services which can be easily delivered across borders can be transformative. But taking advantage of that will require good policy and concerted efforts, and governments in developing countries need to be clear-eyed about the future of the world economy,” said Ranil Dissanayake, a senior fellow at CGD and an author of the study.
Specifically, the researchers project:
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China’s continued manufacturing dominance over the next thirty years, along with rising worker productivity and flatlining demand for manufactured goods, may limit opportunities for poorer countries to industrialize.
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A shift away from low-value manufacturing in China and other East Asian powerhouses may open up some space for poorer countries, but it’s unlikely to enable a wholesale economic transformation into manufacturing. Across all low-income countries, manufacturing jobs are projected to hold steady at below 8% of total employment.
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High-income countries will likely continue to bleed manufacturing jobs, with the sector falling from 11.4% to 8.3% percent of the high-income workforce by 2050.
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Private service sector jobs will make up roughly 37% of global jobs, and 26% in today’s low-income countries, up from about 12%.
The researchers also warned that as the world economy becomes even more dominated by service jobs, barriers to migration will pose just as much of a problem to growth as barriers to free exchange of goods once did.
“The world economy in 2050 is going to be even more dependent on service-sector jobs than it is today, which means we’re all going to be even more dependent on migration than we are today,” said Kenny. “The easiest way to ensure we live in a poorer world would be to prevent people from moving where the jobs are.”
The full study is available at https://www.cgdev.org/publication/manufacturing-destiny-dynamics-future-sectoral-shares-and-development.
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