Traditional economies grow and develop first by industrializing, and then by moving into services. This has been the classic path to economic and political modernity.
A few non-Western countries have been able to replicate this path: Japan, Taiwan, and South Korea are examples that come immediately to mind.
I have been concerned for some time that for most latecomers this path has become increasingly difficult to traverse. It is not that industrialization has gotten entirely out of reach. Most poor countries do experience some industrialization, and China has become the world's manufacturing factory. But the vast majority of developing countries are not attaining industrialization levels reached by early industrializers.
What's even more striking, the onset of deindustrialization is now taking place much sooner, at lower levels of industrialization and lower incomes.
This shown in the chart below, which depicts the peak level of industrialization (measured by manufacturing's share total employment) in a sample of early and late developers. For each country, the income per capita at which deindustrialization began is also shown.
The pattern is unmistakable. While early industrializers managed to place 30 percent or more of their workforce in manufacturing, latecomers have rarely managed that feat. Brazil's manufacturing employment peaked at 16 percent and Mexico's at 20 percent. In India, manufacturing employment began to lose ground (in relative terms) after it reached 13 percent.
This may come as a surprise, but even China employs few workers in manufacturing, relative to its huge labor force. Moreover, the manufacturing share of employment in China seems to be coming down (caveat: Chinese data on manufacturing employment are problematic).
As I explain in a new Project Syndicate column, the early onset of deindustrialization has a number of implications. On the economic front, it slows down growth and delays economic convergence. Politically, it forecloses the typical path to democracy -- through the development of a labor movement, disciplined political parties, and habits of compromise and moderation arising out of industrial struggles over pay and working conditions.