The Unassuming Economist

From a paper byNitiphong Songsrirote & Nalinee Himpong:

“Why do economies that undertake broadly similar industrial and institutional reforms follow markedly different growth trajectories? This study reassesses the manufacturing-led growth hypothesis by examining whether the gains from structural transformation vary across growth regimes and are shaped by institutional quality and resource dependence. Using an annual panel of 217 economies for 1981–2024, the analysis combines MICE imputation, two-state Markov-switching AR(1) regime classification, regime-specific two-step System GMM, observed-WGI validity checks, conservative instrument tests, lambda-sensitivity analysis, and an MI20 consistency check. Given the observational macro-panel design and the use of internal instruments, the estimates are interpreted as dynamic conditional associations, rather than causal effects. Manufacturing intensity does not emerge as a robust predictor of growth performance: in the adjusted baseline model, it is negatively associated with growth in the high-growth regime and weakly negative in the low-growth regime, while losing statistical significance in the observed-WGI, conservative-instrument, post-2000, and MI20 checks. Institutional quality is a more consistent growth-supporting correlate, operating primarily through a direct institutional growth channel rather than through manufacturing-based moderation.”