even when they grow rapidly. Unfortunately, in virtually every country in Figure 1.6, the share of labor in the manufacturing sector declined which suggests that employment in light manufacturing industries (e.g. textiles, apparel and leather products) which are labor intensive declined. Evidently, a large part of the employment losses is due to a decline in the share of textiles, from about 7 percent in 2000 to 5 percent in 2009. Nearly all textiles today are imported from China (UNIDO 2011).

Many developing countries in other regions of the world have managed to experience significant growth through exporting light manufactures. In comparison, although Africa‘s exports and imports of light manufactures were balanced in 2000, the region had a trade deficit in light manufactures in 2008. The fact that Africa is increasingly dependent on other regions for light manufactures is significant for three reasons. First, the trade deficit indicates that African economies have a sizeable domestic market for light manufactures products which could form the basis for the expansion of a light manufacturing sector in at least some African countries. Second, light manufacturing sectors are a stepping stone towards more sophisticated technologically sophisticated manufacturing industries (UNIDO, 2011). Third, given the size of global demand for light manufactures, there is significant potential for African exports of light manufactures which can stimulate capital deepening and facilitate structural transformation into more advanced sectors.

Some may argue that in comparison to light manufactures, resource-based processing industries can contribute equally to growth in Africa. This hypothesis implies that Africa‘s deindustrialization is not necessarily inimical to growth. We argue that light manufacturing is a prerequisite for Africa‘s industrialization and catch up with richer countries. Both the lowemployment intensity and high vulnerability of resource processing industries to external price shocks are constraints to sustained labor-reallocation necessary for the structural transformation of natural resource-based African economies. Moreover, resource-based sectors exhibit lower productivity growth and have few linkages with the rest of the economy (Lall, 2004c). In sum, resource-based manufactures show only very limited product differentiation and thus share several characteristics of commodities (UNIDO, 2011).

# **3.2   China as a following goose: learning and industrial upgrading**

China‘s success over the past three decades is the result of a two-pillar strategy: first, adopting a dual-track approach to reforms, giving transitory protection to old comparative advantagedefying, capital-intensive sectors and liberalizing entry to comparative advantage-following, labor-intensive sectors, and thereby achieving both stability and dynamic transformation simultaneously; second, as a latecomer, choosing an economic development strategy that taps into the potential advantage of backwardness along the lines of the flying-geese pattern.<sup>20</sup>

> 20 For further discussions of these two points, see Justin Yifu Lin, ―China Miracle Demystified,‖ _Econometrica_ (forthcoming) _,_ and _Demystifying the Chinese Economy_ , Cambridge University Press.

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