In 2022, the global industrial sector, including mining, manufacturing, and utilities, grew by 2.3%. Among them, manufacturing was the most active, increasing by 3.2%, while the mining and utilities sectors contracted by 0.9%. In 2023, industrial growth slowed due to various adverse factors. Although manufacturing globally drove industrial growth, mining and utilities remained the largest contributors in low-income economies.

In recent years, global manufacturing has shown a “dual decoupling” trend. On the one hand, there has been a positive decoupling between manufacturing activities and carbon emissions, with production continuing to rise while emissions remain relatively stable. On the other hand, there has been a negative decoupling between manufacturing output and employment, meaning that the increase in manufacturing output has not led to more job opportunities. This trend has been particularly pronounced for female employment in manufacturing, which has declined, a situation exacerbated by the pandemic.

The global landscape of manufacturing is also changing, with a noticeable trend of industrial relocation. The manufacturing sector in high-income economies is shifting toward middle-income economies, as well as from North America and Europe to Asia and Oceania. The pandemic crisis has accelerated this trend.

At the same time, the importance of high-tech industries within the manufacturing sector is increasing. These industries have recovered faster post-pandemic and continue to expand dynamically, while low-tech industries have stagnated. This divergence could further widen inequalities both within and between nations.

Since 2015, all regions and country groups—except for high-income industrial economies and Latin America & the Caribbean—have made progress toward achieving the United Nations Sustainable Development Goals (SDGs). However, the overall pace of progress remains insufficient to achieve the global SDGs by 2030.

From an innovation perspective, the world’s most innovative economies are concentrated in Europe, East Asia, and North America. However, data collection needs to be further strengthened to comprehensively measure manufacturing innovation, its drivers, obstacles, and impacts, and to provide critical insights for policymaking.

The Value of Manufacturing in Different Economies

1.1 Manufacturing as the Main Driver of Industrial Growth

The added value of manufacturing holds a significant position in many countries, especially in middle- and high-income economies. Meanwhile, industrialization remains one of the most promising development strategies for the least developed countries.

In low-income economies, the mining and utilities sectors contribute more to industrial growth due to their strong resource dependency. These sectors play a critical role in their economic structures.

Figure 1 illustrates the contribution of different regions to industrial growth, highlighting the variations in industrial structures across regions. These differences reflect the diverse levels of global economic development and industrial structures..

Figure 1: Manufacturing as the Primary Driver of Industrial Growth

1.2 Trade Balance of Manufacturing in Different Economies

The manufacturing trade balance refers to the difference between a country’s or region’s total exports and imports of manufactured goods. A trade surplus (exports greater than imports) typically indicates a competitive manufacturing sector in the global market, while a trade deficit (imports greater than exports) suggests a reliance on foreign-manufactured products.

For example, China’s manufacturing sector has demonstrated strong competitiveness in the global market, maintaining a long-term trade surplus. However, with changes in the global economic environment and domestic economic restructuring, challenges such as rising labor costs and international trade frictions may impact China’s manufacturing trade balance.

Figure 2 presents differences in manufacturing trade balances across economies. Some industrialized economies show the largest trade deficits as a share of GDP, indicating significant imbalances in their manufacturing trade. For low-income economies, persistent trade deficits in manufacturing are particularly concerning. These economies may lack sufficient industrial capacity and technological advancement to produce and export high-value-added manufactured products, leading to trade deficits.

A manufacturing trade deficit can negatively impact the economy, including reducing foreign exchange reserves and increasing vulnerability to external economic shocks. For low-income economies, such deficits may limit economic growth and development potential.

Figure 2: Manufacturing Trade Balance Across Economies

2. Global Trends in Manufacturing Development

2.1 Manufacturing Relocation Trends

Manufacturing production has been shifting from industrial economies in Europe and North America to Asia. Figure 3 highlights this significant trend of global manufacturing relocation. This shift reflects a geographical rebalancing of the manufacturing sector, with Asia’s share of global manufacturing value added (MVA) increasing substantially. This trend has important implications for the global economic landscape and regional economic development strategies.

The squares in the figure represent the percentage of global MVA, with each square equating to 1% of global manufacturing value added. The figure shows that Asia’s share in global manufacturing is steadily rising, while Europe’s and North America’s shares are relatively declining. This relocation trend is primarily driven by factors such as lower labor costs, larger market scales, and supportive policies in Asia.

Figure 3: Manufacturing Relocation Trends

2.2 The Decoupling of Manufacturing Production and Employment

Figure 4 reveals that despite the growth in manufacturing production, it has not translated into increased employment opportunities. This suggests that improvements in production efficiency and automation may have reduced the demand for human labor, leading to a decoupling between manufacturing output and employment. This trend presents challenges for policymakers in balancing economic growth and employment security.

Such a shift could have significant impacts on labor markets, particularly in economies where manufacturing plays a key role. While productivity and output are increasing, stagnant job growth may lead to fewer employment opportunities, especially in low-skill occupations.

Figure 4: The Decoupling Between Manufacturing Production and Employment

2.3 The Decline of Female Employment in Manufacturing

Recent years have seen a decline in female employment in manufacturing, particularly during the pandemic (Figure 5). The economic uncertainty caused by the pandemic and its impact on certain industries disproportionately affected women’s employment. Industries such as services and retail, where women are more concentrated, were hit hard, leading to higher female unemployment rates.

Additionally, increased family responsibilities during the pandemic may have forced some women to exit the labor force. The persistence of gender inequality in global manufacturing necessitates policy interventions to support women’s employment in the sector and address challenges posed by the pandemic.

Figure 5: The Decline of Female Employment in Manufacturing

2.4 The Expansion of High-Tech Industries in Manufacturing

The growing importance of high-tech industries within manufacturing is a global trend. These industries are expanding and having an increasing impact on the global economy. This trend may further drive technological innovation and economic growth, while also exacerbating inequalities between nations and regions.

•  The Rising Importance of High-Tech Industries

Figure 6 illustrates the changing share of high-tech industries in manufacturing value added. These industries include computers, electronics, optics, chemicals, machinery, motor vehicles, electrical equipment, and material-handling equipment like bridge cranes. The data indicate that from 2001 to 2021, high-tech industries significantly increased their share in manufacturing value added, reflecting the global shift toward high-tech manufacturing.

 

Figure 6: The Growing Importance of High-Tech Industries in Manufacturing

•  The Rapid Recovery of High-Tech Industries Post-Pandemic

The high-tech industry has experienced a rapid recovery and continued expansion after the pandemic, whereas the growth of low-tech industries has stagnated. This highlights the crucial role of technological innovation in economic recovery and growth while also pointing out the challenges faced by low-tech industries. This trend has significant implications for the global economic landscape and policy-making.

Figure 7 illustrates the recovery and expansion of the high-tech industry. Data indicates that the high-tech sector rebounded more quickly after the pandemic and continues to expand dynamically. These industries include computers, electronic and optical products, chemicals, machinery, material handling equipment, overhead cranes, and more. The rapid recovery and expansion of the high-tech sector reflect its advantages in innovation, efficiency, and market demand.

In contrast, the growth of low-tech industries has remained stagnant. This is primarily due to their lack of technological innovation and market competitiveness, which has prevented them from keeping pace with global economic recovery.

Figure 7: High-Tech Industries’ Rapid Recovery and Expansion Post-Pandemic

• The Potential Widening of Inequality Due to High-Tech Growth

The divergence between high- and low-tech industries may further widen inequalities between and within nations. Low-income economies, which lack specialization in high-tech industries, may struggle to compete in the global market, limiting their development opportunities (Figure 8).

Figure 8: The Widening Inequality Between High- and Low-Tech Industries