What we think as a natural or smart move in a knowledge driven post industrial world that services are the way forward in reviving an economy was put into perspective by Prof Ha-Joon Chang. Control of knowledge has always been key to economic prosperity (Take home point). Spin out and outsourced knowledge intensive work out of the manufacturing sectors has been the cause of the misconception. Wrong to separate the manufacturing from the knowledge sector.Driven by demand for practical solutions grows knowledge. Little knowledge created through “pure” knowledge activities.Services can only be developed after you first acquire the ability to manufacture the relevant products. Services are sold mostly to manufacturing firms therefore prosperity depends on manufacturing success. Services will over time relocate to the manufacturing sites for logistical reasons.
Swiss has a high manufacturing value added per capita – Source UNIDO
India as the office of the world in trade specialisation – Until 2004 had deficit in service trade. Up to 2009, India trade surplus could not cover manufacturing deficit. They will face balance of payment issues without firm up rise in service trade surplus.
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