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Despite the rise in services, manufacturing is still the hotbed of innovation and productivity in today’s economy, said Professor Murat Yülek, Director of the Center for Industrial Policy and Development, Istanbul Commerce University, at an EIB Institute seminar.

In most economies, manufacturing is declining in terms of output and employment but not in terms of productivity, said Prof Yülek. In fact, productivity of the non-manufacturing sector is positively related to the growth of the manufacturing sector which still represents 82% of world trade, he added.

For developing countries, a sectoral or product-based industrial policy may be instrumental to build key industrial capabilities provided it builds on four strategic drivers, he concluded. These drivers are: (i) value added potential (ii) backward linkages (iii) potential of learning by doing and (iv) technological depth.

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