Manufacturing and competitiveness: the case of Greece

Abstract

Despite long-standing debates on deindustrialisation and the importance of manufacturing, as well as tests of the deindustrialisation hypothesis, little empirical work exists on the impact of manufacturing on competitiveness, where manufacturing is the independent variable. To address this first presents a conceptual framework that links manufacturing to competitiveness and deindustrialisation and tests it for a case of serious apparent deindustrialisation and “relative decline”, that of Greece, in the context of a novel “simultaneous equation model” that tests both for deindustrialisation and “manufacturing matters”. Finds that the change in manufacturing shares have a positive and significant impact on competitiveness measured by per capita income, confirming that “manufacturing matters”.