rejoinder to firebaugh

8/13/2019 Rejoinder to Firebaugh

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Industr ia l C onvergence and thePers is tence o f the N orth-Sou thInco m e D iv ide : A R ejo inder toF irebaugh 2004)G i o v ann i A r r i g h i B ev er l y J Si l vera n d B en j am i n D . B r ew er

n I n d u s t r i a l C o n v e r g e n c e , G l o b a l i z a t i o n , a n d th e P e r s i s te n c e o f t h e N o r t h -S o u t h D i v i d e ( A r r i g h i , S il v er , a n d B r e w e r , 2 0 0 3 ) w e p r e s e n t e d t w o s i m p l e s t a -

t is t ic s . O n e s h o w e d t h a t o v e r t h e l a st f o r t y y e a rs , t h e d e g r e e o f i n d u s t r i a l i z a t io n o ft h e G l o b a l S o u t h , w h e n m e a s u r e d b y t h e p r o p o rt i o n o f G D P g e n e r a t e d i n m a n u f a c -t u r i n g , h a d c a u g h t u p w i t h a n d t h e n o v e r t a k e n t h e d e g r e e o f i n d u s t r i a l iz a t i o n o f th eG l o b a l N o r t h . T h e o t h e r s h o w e d t h a t o v e r t h e s a m e f o r t y y e a r s t h e r e w a s v i r t u a l l yn o i n c o m e c o n v e r g e n c e b e t w e e n N o r t h a n d S o u t h. T h i s m i s m a t c h b e t w e e n i n d us -t r i a l c o n v e r g e n c e a n d i n c o m e c o n v e r g e n c e , w e c l a i m e d , r e p r e s e n t s a m a j o r p u z z l ef o r th e t h e o r i e s t h a t i n s p i re d t h e i n d u s t r i a l iz a t i o n d r i v e o f T h i r d W o r l d c o u n t r ie s . I na r e c e n t c o m m e n t , G l e n n F i r e b a u g h d i s m i s s e s o u r c l a i m o n t h r e e g r o u n d s , s t a t i n gtha t ( 1) i t r e s ts o n t h e d e m o n s t r a b l y f a l s e e m p i r i c a l c l a i m t h a t i n c o m e in e q u a l i t yis n o t d e c l i n i n g a c r o s s n a t io n s ; (2 ) it r e li e s o n t h e n o r m a t i v e . . . a n d c o n t e n t i o u sc l a i m t h a t th e o b j e c t i v e o f d e v e l o p m e n t p o l i c y i s t o r e d u c e i n c o m e i n e q u a l i t y a c r o s sn a t i o n s ; a n d ( 3 ) w h a t w e i n t e r p r e t a s T h i r d W o r l d o r S o u t h e r n i n d u s t r i a l i z a t io ns h o u l d i n st e a d b e i n te r p r e te d a s s e g r e g a t e d m a n u f a c t u r i n g g r o w t h ( F i re b a u g h ,2 0 0 4 : 1 00 , 1 0 2 ). W e d e a l w i t h e a c h o f t h e s e c r i t i c i s m s i n t u r n .

Giovanni Arrighi is professor of sociology at The Johns Hopkins U niversity. His latest books areT he L ong T w e n ti et h C e n t ury : M one y, Pow e r and t he Or i g i ns q f Our T i me s (1994) and (with BeverlyJ. Silver et al.) C haos an d Go v e rnanc e i n t he M od e rn W or ld Sy s t e m (1999).Beverly J. Silv er is professor of sociology at The Johns Hopkins U niversity. She is the a uthor ofForc e s o f L abor : W ork e r s M o v e m e n t s an d G l oha l i za ti on S i nc e 1870 (2003) and co-author (withGiovanni Arrighi et al.) of C haos an d G ov e rnanc e i n t he M ode rn W or ld Sy s t e m (1999) .Benjam in D. Brew er is assistant professor of sociology at James M adison University. He has pub-lished articles on globalization, spo rt, and the gl oba l division of labor, and con tinues to expandupon his dissertation research, a com mod ity chain analysis of the global soccer econom y.S t ud i e s i n C ompara t i v e In t e rna t i ona l De v e l opme n t , Sprin g 2005, Vol. 40, N o. 1, pp. 83 -88.


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8 Studies in Comp arative International Development Spring 2005

First , the issue of whether inter-country income inequali ty (measured by sum-mary indicators l ike the Gini or Theil coeff ic ients) has been r is ing or declining ismore controversia l than Firebaugh cla ims (see , among others, Wade, 2004) . How-ever , we did not take a posi t ion on this issue; ou r ar t ic le focu sed exclusively on theNor th-South income div ide measured by the GNP per capi ta of the Third Wor ld asa percentage of the GNP per capita of the First World.

Second, our c la im that catching up with First World standards of wealth was thegeneral ly accepte d objective of developm ental effor ts is not a norm ative sta tement;ra ther, i t is a s ta tement of fact about the premi ses and expectat ions o f developm enttheory dur in g i ts gold en age of the 1950s and 1960s. 1 Even the mos t cursoryreading of Rostow's canon ical text (1960) reveals how centra l the idea of catchingup with the West was to the entire dev elop men t project . More impo rtant for ourpurpose s, the industr ia l izat ion o f poo r countr ies and the de- industr ia l izat ion o f richcountr ies Daniel Bell 's (1973) com ing of post- industr ia l soc ie ty - -w ere gener-al ly expected to br ing about income convergence between the two.Understandably, the fa i lure of these ex pectat ions to mater ia l ize has led to a reori-enta t ion o f develop men t polic ies towards other object ives, such as the a l levia t ion ofpoverty and the sat isfact ion of basic needs. While we sym pathize w ith the prudenceof this normative reor ienta t ion, we strongly disagree with Firebaugh's dismissal ofthe signif ican ce of the huge and persistent North-So uth i ncom e gap. Focusing ex-clusively on national income growth, without paying a t tention to inter-country in-come inequa li ty, may be good enoug h for economis ts but i s not good enough forsociologists . Relat ive deprivation is sociologically as importan t as , and in key re-spects more important than, absolute depr ivation. Northern consumption patternsand nor ms have a lways exercised a strong dem onstra t ion effect on Southern soci-e t ies , both by changing perceptions of what consti tutes a goo d l ife , and by diver t-ing national resources f rom patterns of consumption and investment that generatelocal in com e and jobs. As a result , re la t ive deprivation tends to increase even i fabsolute depr ivation is decreasing. I t make s no sense to deny these effects val idityat a t ime w hen thir ty years of so-called globalizat ion have exposed Southern socie t-ies to No rthern demo nstra t ion effects to a far greater extent than ever before .

Regardin g Firebaugh's third cr i t ic ism, the regression equ ations that he calls ourcentra l mode l were presented not as mod els of causal re la t ionships, but as de-scr ipt ive sta t is t ics-- that is , as means to identify patterns in the re la t ionship be-tween industr ia l and income convergenc e/divergen ce over t ime (Arr ighi , Silver,and Brewer , 2003 :28 n13) . Our central m odel , i f there was one, was the explanation we offered of the patterns so identif ied. Yet Firebaugh concentra tes on dem on-stra ting that we got our explanandum wrong. Through an a lgebraic transformation,he transla tes our s ta tement that var iabil i ty in income performance is uncorrela tedwith var iabil i ty in industr ia l performance into the a lgebraical ly equivalent s ta te-men t that the dif ference between in com e growth rate and populat ion growth ra te isuncorrela ted with the dif ference between manufactur ing growth ra te and incomegrowth ra te (pp. 101-102) . We object to Firebaugh's contention that the reformu -lated statement (his) is correct, while the original statement (ours) is incorrect. Be-ing a lgebraical ly equivalent , the two sta tements say exactly the same thing; theyjust say it in different words.

The reason why Firebaugh dismisses our s ta tement has nothing to do with his


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algebraic t ransforma t ion and ev erything to do w ith his reject ion of the part icularind ica tor we use to measure var ia t ions in the degree o f indus t r i a l i za t ion : theproport ion o f total value added or GD P generated in manufacturing . If value addedin manufa cturing grows fas ter than total value added, we interpret the correspo nd-ing increase in the proport ion o f GDP generated in man ufactu ring as an increase inthe country's degree of industrialization. Firebaugh, in contrast , interprets the in-crea se as a sign that the countr y is expe rienc ing not industrialization, but segr e-ga ted manufac tur ing growth a condit ion in whic h man ufac tu r ing growth surgedahea d of total inc om e grow th (2004: 102).I t is not clear from Firebaugh 's com me nt what , exact ly , segregated manufa ctur-ing grow th (henc eforth SMG) is. To benefi t a coun try economical ly , we are told,ma nufa cturin g should be l inked to other sectors of the economy . Successful indus-t r ial ization [as opposed to SM G] means that man ufactu ring growth does not jus tboost manufa cturing, but boosts other econom ic sectors, as wel l (Firebaugh, 2004:102). These s tatements provide two dis t inct defini t ions of SMG, as de-l inked orunbalan ced m anufa cturing growth, and as unsuc cessful industrial izat ion. The f i rs tdef in i tion focuses on a hypothet ica l cause o f income grow th-- the k ind of manu-facturing growth that, ac cording to Firebaugh, can be ex pected to result in incomegrowth. The second, in contrast , focuses on results that is, wh eth er or not manu-facturing growth has actual ly resul ted in incom e growth.The f i rs t def in it ion echoes the cen tra l debate o f go lden-age developmen t theoryon the issue of balanced vs . unbalanced growth. Is Firebaugh 's SM G mea nt to drawour at tent ion to industr ial s t ructure and to the imp ortance o f forward and backw ardlinkages in sustaining industrial gro wth and in ensuring that i t translates into over-all income growth'? If so, we would agree that our indicator is i l l-suited to distin-guish betwe en different kinds of man ufacturing growth. We would also agree thatan effort should be made to devise indicators suitable to testing the hypothesis thatcertain kinds of manufac turing growth are more conduc ive than others to incom egrowth.However, Firebaugh does not com me nt on balanced vs. unbalan ced growth. In-s tead, he s tates that wh enev er manufactu ring growth surges ahead of total incom egrowth, we are deal ing with a case of SMG . This s tatement make s no theoret ical orempirical sense, because i t rules u t the ve ry real possibili ty that an inc rease in theproport ion of GDP generated in manufa cturing might be associated with high in-come growth and would thus qual i fy as successful industr ial izat ion-- the opposi teof SMG by Firebaugh 's second defini t ion.The data provided in Tables 1 and 2 o f our 2003 article clearly i l lustrate thiscontradict ion between Firebaugh 's two defini t ions of SMG. Acc ording to those data,man ufactur ing growth surged ahead o f total incom e growth most marke dly in EastAsia, whereas i t surged ahead least markedly in Lat in America and Sub-SaharanAfrica. Hence, by Firebaugh 's f i rs t defini t ion, manufa cturing growth in East Asiawas mor a case of SMG than manufacturing growth in Lat in America or Sub-Saharan Africa. But our data also show that income grow th was muc h fas ter in EastAsia than in Lat in America an d Sub-Sa haran Africa and so, by Firebaugh 's seconddefini t ion, manufa cturing growth in East Asia was l ss a case o f SMG than manu-facturing growth in Lat in Ame rica or Sub-S aharan Africa.Appare nt ly unaware of this contradict ion, Firebaugh proposes an al ternat ive tes t


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8 Studies in Comparative International Development Spring 2005

Table 1Corre lat ion Coef f ic ients for Income Growth wi th

Growth of Value Adde d in Di f ferent Sectors 1965-1998)

r (weighted) r (unweighted )Agriculture 0.78 0.34Industry 0.98 0.89Manufacturing* (1960 1999) 0.87 0.77Serv ices 0.98 0.95

of whe ther industrial izat ion has advan ced poor coun tr ies economical ly . Regre ss ingincom e growth on industr ial growth for 59 o f the 61 Third World countr ies used inour regress ions , he f inds s t rong posi t ive correlat ions: for 1965-1998 a who ppingr of 0.98, with coun tries we ighte d by popu lation size; and for 1980 1998 an r of0.93 weigh ted by populat ion, and an r of 0 .80 unw eighted. These resul ts are notsurpris ing: value add ed in industry (w hich includes not jus t manu facturing butconstruct ion and mining as wel l ) i s a major c om pon ent of total value added ( in-come). I t i s only to be expec ted that in a coun try whose total value added is growingrapidly, the growth rate of value added in industry wi l l be higher than that of acoun try who se total value added is growing less rapidly or not at al l, even i f therelat ive importance of industry is decreasing in the rapidly growing country andincreasing in the s lowly growing country, This is why Firebaugh f inds a very s t rongposi t ive correlat ion betwe en industr ial growth and in com e growth. But this s t rongposi t ive correlat ion tel ls us nothing about the relat ionship betwe en incom e growthand industrial ization as a process of s t ructural ch ange that increases the impo rtanceof industrial activit ies.To com e to this realization, i t is neces sary to regress inco me grow th on the grow thof value add ed not jus t in industry , as Firebaugh does , but also in the other two mainsectors of economic act ivi ty: agricul ture and services . Using the same source asFirebaugh (World Bank, 2000: Table 1.4), we obtained the correlation coefficientsshown in Table 1. Like Firebaugh, w eight ing countr ies by population, w e f ind forindustry a huge r of 0 .98. But we f ind the ident ical r for services , and a smal ler butnonetheless qui te s t rong r o f 0.78 even for agricul ture. Interes t ingly, the r for manu -factu ring (0.87), while also very high, is closer to the r for agriculture than to thosefor industry or services . 2

The interpretation o f these resul ts i s s t raightforward. The s t rong posi tive corre-lations show n in Table I reveal nothing about the relationship betwe en incom e growthand industrialization, de-industrialization, or any other structural cha nge in the eco no-mies of Third World countr ies. Al l they tel l us is that cha nges in total value added(GDP ) are s t rongly correlated with ch anges in the parts (value added in agricul ture,industry, and services) o f wh ich total value adde d is the sum. To take the incre ase invalue a dded in industry as a meas ure o f industr ializat ion, as Firebaugh invites us todo, makes as l i t t le sense as taking an increase in value added in agriculture as amea sure of agrarianizat ion. Beca use real value added in US agricul ture mor ethan doubled betw een 1971 and 200 1-- des pi te the fact that as a proport ion of total


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rejoinder to firebaugh

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