The world is currently facing multiple challenges, including pandemics of contagious diseases such as COVID-19, persistent extreme poverty, severe impacts of global warming and climate change, as well as rising inequality in many countries. Under these circumstances, few people would disagree with the idea that the values and practices embodied in the concept of “quality” of growth are now needed more urgently than ever. The “quality” of growth concept can be applied to addressing many of our key contemporary challenges, such as jobs, equity, the environment, resilience, human security, and so forth.

Quality of growth is a concept that has been growing in importance over the past twenty years. It was a central pillar of the “APEC (Asia Pacific Economic Cooperation) Growth Strategy” agreed by APEC leaders in 2010 (APEC 2010). It emphasizes balanced growth, inclusive growth, sustainable growth, innovative growth, and secure growth. The United Nations document on “Sustainable Development Goals (SDGs)” states in its introduction that “We resolve to create conditions for sustainable, inclusive and sustained economic growth, shared prosperity and decent work for all” (UNGA 2015, 2). As such, it appears that the concept of quality growth is inherent in many aspects of the SDGs.

On the other hand, in recent policy debates on growth and development, including the post-2015 discussions, there has been a stronger focus on economic and social transformation. The SDG document cited above states that, “On behalf of peoples we serve, we have adopted a historic decision on a comprehensive, far-reaching and people-centered set of universal and transformative Goals and targets” (UNGA 2015, 2). “In these Goals and targets, we are setting out a supremely ambitious and transformational vision” (UNGA 2015, 3).

Likewise, focusing on economic transformation, the flagship report of the Asian Development Bank (ADB 2013) argues that development is distinct from aggregate growth, which can occur without significant transformation, as has happened in some oil-rich economies. The report highlights five key components of transformation: “(1) reallocation of factors of production; (2) diversification, upgrading, and deepening of the production and export baskets1; (3) use of new production methods and processes and different inputs; (4) urbanization; and (5) social changes” (ADB 2013, 3–5). Therefore, there now seems to be more of a consensus on the importance of quality of growth on the one hand, and economic and social transformation on the other.

Another aspect under consideration is the centrality of the transformation process for quality growth. McMillan et al. (2017) reiterate this aspect in the following way: “The quality of economic growth matters. For the majority of today’s developing countries, a change of gear from steady but low-quality growth to a process of economic transformation is the only secure route to sustained poverty reduction” (ix). Accordingly, the relationship between quality growth and transformation becomes crucial to policy debates on development and international cooperation.

The main objective of this book is to seek out insights into the concept of high ‘quality growth’. We will explore its essential attributes, such as inclusiveness, sustainability and resilience, as well as its relationship with transformation, by drawing principally on illustrative cases and experiences of international cooperation. Each country faces its own challenges in attempting to develop and implement its own quality growth and transformation agendas. In this context, lessons learned from the experiences of other countries in achieving quality growth may not be directly applicable, but they can be useful in formulating strategies and determining effective approaches for addressing transformation agendas. The experiences of other countries could therefore be relevant in establishing each country’s ‘quality growth strategy.’

In the next section, I summarize some of the basic aspects of quality growth, transformation, and the relationships between them. These are areas in which there has been growing consensus in recent years.

1.1 Key Attributes of Quality Growth and Its Definition

Haddad et al. (2015) state that the United Nations Development Programme (UNDP), through both its Human Development Reports and Human Development Index, has brought the idea of the quality of growth into the mainstream policy discourse since 1990. One seminal work in the development of the concept, The Quality of Growth by Thomas et al. was published in 2000. However, as Haddad et al. (2015) stress, trends and events of the last decades have moved debates on quality growth from being a largely academic exercise to becoming an urgent matter of public policy.2 Recent significant trends and events demonstrating the current relevance of quality of growth include the global financial crisis of 2007–08, the more compelling evidence on climate change, and potential tradeoffs between economic growth, poverty reduction and environmental costs, and the consequences of inequality. Indeed, the debates related to the APEC Growth Strategy emphasizing quality of growth started in the aftermath of the 2007–08 crisis.

Haddad et al. (2015) identify three agreed-on key attributes of quality growth as follows: “(i) growth that manages environmental tradeoffs, (ii) growth that supports equity and inclusiveness, and (iii) growth that is less susceptible to shocks” (3). A similar approach can be seen in the “Development Cooperation Charter” announced by the Japanese government in 2015. According to the Charter, one of the most important challenges of development is “quality growth” and the poverty reduction achieved through such growth. The approach in the Charter emphasizes inclusiveness, sustainability, and resilience (Cabinet Office, Japan 2015).

Most recently, Kanbur et al. (2019) establish the following as attributes of quality growth: “(i) the distribution of the income gains from growth; (ii) the translation of economic growth into nonincome dimensions of well-being, such as employment, health, education, and security; (iii) the structural transformation of the economy, so that the sources of growth and employment are diversified away from dependence on low-productivity primary commodities and informal activities toward modern manufacturing (including “industrial agriculture”) and services; (iv) management of the urbanization process so that it enhances the quality of life; and (v) environmental sustainability” (3).

For each of the attributes of quality growth, such as inclusiveness, sustainability, and resilience, years of academic research and public debates have been made. Haddad et al. (2015) and Kanbur et al. (2019), for example, provide an overview of this research and debates. From these discussions, it is clear that an in-depth analysis of the attributes of quality of growth is crucial for formulating a comprehensive definition of “quality growth.” I will discuss these specific attributes throughout this volume, focusing on inclusiveness in Chaps. 4 and 5, sustainability in Chap. 7, resilience in Chap. 8, and the management of the urbanization process in Chap. 6. I will consider transformation and its relationship with quality growth in Chaps. 2 and 3.

1.2 Dimensions of Transformation and Its Definition

“Transformation” has multiple dimensions that vary according to context. It refers very often to industrial or industrial structure transformation.3 It also refers to broader dimensions of economic and social changes. The “supremely ambitious and transformative vision” of the UN document cited above is related to the broader and multiple dimensions of transformation. In this regard, the above-cited ADB definition of transformation, with its five key components, appears to be highly relevant. The first three components are related to industrial (structure) transformation: (i) reallocation of factors of production; (ii) diversification, upgrading, and deepening of the production and export baskets; and (iii) use of new production methods and processes and different inputs.4 The other two components, urbanization and social changes, are concerned with broader transformation. Industrial transformation, urbanization, and social changes are intrinsically interrelated. Industrial transformation accelerates urbanization and social change and vice-versa.

Thus, with its multiple dimensions, transformation could contribute to quality growth. Through this process, a society can transform continuously to become a more inclusive, sustainable, and resilient one.

1.3 How Transformation Takes Place and What Triggers It

ADB (2013) identified the following factors likely to affect the direction and pace of transformation: (i) demand and supply change; (ii) demographic and geographic variables (such as resource endowments and population density) and country size; (iii) good organization capabilities (capabilities encompassing all the tacit knowledge necessary to produce a good or deliver a service); (iv) specific policies and actions (including those pertaining education and technological learning); (v) institutions; and (vi) politics.

Regarding demand and supply change, international trade and investment (FDI) are overwhelmingly crucial factors in a globalizing world and, because of this, dynamic comparative advantage matters. According to Noman and Stiglitz (2012), the “old” policies focused on improving economic efficiency within a static framework, “but the essence of development is dynamic. What matters, for instance, is not comparative advantage as of today, but dynamic comparative advantage” (7). Lin (2012), likewise, discusses ‘changing comparative advantage,’ arguing that “the more effective route for their learning and development is to exploit the advantages of backwardness and upgrade and diversify into new industries according to the changing comparative advantages determined by the changes in their endowment structure” (73).

Based on the literature and cases in practice, essential endowments for dynamic comparative advantage are, among others, learning capacity and human capital in which learning capacity is embedded, infrastructure, and institutions (see Chaps. 2 and 3). In short, the enhancement of essential endowments is a driving force of industrial transformation. The essential endowments, along with standard factor endowments, enable changes in dynamic comparative advantage.

Essential endowments, such as learning capacity and human capital, infrastructure, and institutions, among other factors, strongly affect the direction and pace of both transformation and quality growth. Learning contributes to growth and competitiveness through increases in productivity and innovation. Growth can be genuinely inclusive and innovative when it takes full advantage of the talents of the entire population. The case studies in Chaps. 7 and 8 also demonstrate how learning is critical for sustainable growth and resilience. Infrastructure such as transport and communication networks that encompass remote populations and provide a connection to domestic and world markets support growth across sectors, geographic areas, and households, creating opportunities for quality growth. The SDGs (Goal 9) refer to quality, reliable, sustainable and resilient infrastructure to support economic development and human well-being, with a focus on affordable and equitable access to all. Thus, quality of infrastructure is crucial for achieving quality growth.

Also relevant here are institutions to promote good governance, macroeconomic stability, the rule of law, and efficient administration, since they promote growth opportunities that do not discriminate. For instance, progressive tax regimes, as well as inclusive education and universal health-care institutions, provide the foundations for inclusive growth. Thus, inclusive institutions matter. In short, the above-mentioned essential endowments contribute directly, as well as indirectly through transformation, to quality growth. I discuss the nexus between changing endowments, transformation, and quality growth further in Chaps. 2 and 3.

1.4 The Case Studies Approach

Case studies are presented in each of the remaining chapters of this volume. They provide valuable insights into the key issues discussed. The case study approach distinguishes this volume from some previous literature that discusses quality growth within the framework of general policy. Instead, in this volume, concrete cases and experiences will provide insights into hands-on ‘ingredients.’5 Through the case studies, we can see more clearly that transformation and quality growth is not something that happens automatically, but something that requires specific, properly designed strategies and approaches.

1.5 The Organization of This Volume and Its Main Pillars

This volume starts with a comprehensive discussion of the conceptual and analytical aspects of quality growth and transformation (examined in the first part of Chap. 2), and of the main strategies for attaining transformation with quality growth (covered in the latter part of Chap. 2). Based on the findings of Chap. 2, I analyze five outstanding cases of economic transformation to obtain insights into how crucial factors interact in practice, producing synergies (Chap. 3). Then, in Chap. 4, I focus on learning capacity, which is considered the most important endowment for transformation. With these analyses in mind, I suggest strategies that could prove promising for sub-Saharan countries (Chap. 5). The subsequent three chapters focus on issues related to urbanization, sustainability, and resilience. I first review the relationship between transformation, urbanization, and quality growth (Chap. 6). In Chap. 7, I discuss the sustainability aspects of quality growth, exploring several cases of transformation and growth with the use of natural capital, green growth with agroforestry and conservation of forests, and environmentally friendly consumption and production. Following that, I discuss the resilience aspects of quality growth, focusing particularly on cases of disaster risk management (Chap. 8).

1.5.1 Strategies for Transformation and Quality Growth

Chapter 2 aims to provide insights into some of the main strategies for attaining transformation with quality growth and explore effective approaches for implementing them. It begins by presenting an overview of the growing concern with and current policy debates related to transformation and quality of growth in academic writings, as well as in international and regional organizations and think-tanks. Chapter 2 examines emerging literature emphasizing that development is achieved by transformation of the productive structure of the economy and accumulation of requisite capabilities. It stresses that learning capacity, infrastructure, and institutions, along with standard factor endowments, are critical determinants of dynamic comparative advantage. Based on this, I discuss key issues, identifying seven main, but not exhaustive, promising strategies: those required to enhance each of the three essential endowments necessary for transformation, and those necessary to catalyze transformation and quality growth, through (i) sequential catching-up, (ii) integration into regional and global value chains, (iii) innovation, and (iv) development of inclusive business.

It is clear that the enhancement of endowments and transformation do not take place automatically. These processes are normally endogenous, but they need to be catalyzed or facilitated by industrial strategies and policies. As a corollary, it might be realistic to design policies and measures to attain the desired attributes of quality growth alongside the development of specific industries and their value chains while remembering specific transformation paths and quality growth agendas.

1.5.2 Industrial Development and Transformation: Insights from Outstanding Cases

Chapter 3 analyzes five outstanding cases of industrial development that resulted in a remarkable economic and social transformation in a country or regions of a country in order to explain how essential endowments and other crucial factors interact in practice. These cases are highly varied both in terms of the type of sectors as well as country contexts. The chapter looks at (i) the automobile industry in Thailand; (ii) the transformation of the ‘Cerrado’ tropical savanna in Brazil from a huge tract of barren land to a source of high productivity agriculture and agro-industry value chains; (iii) the garment industry in Bangladesh; (iv) the salmon farming and processing industry in Chile; and (v) Singapore’s upgrading of its industrial sector from a labor-intensive sector to a knowledge-intensive one.

I seek to extract insights from these five case studies on how the various considerations that go into the making of industrial strategies and policies interact in practice in successful cases. I focus in particular on the acquisition of capabilities, the creation of a learning society, development of infrastructure, the use and alteration of endowments to move from static to dynamic comparative advantage, the compensation for the positive externalities generated by the costs of discovery by pioneer firms, and the management of the pressures generated by globalization and other factors.

The five case studies illustrate how the general principles of good industrial strategy and policies vary in their translation into different contexts. They also illustrate the mutual causality between “industrial development and economic transformation” on the one hand and the “constant development of capabilities and knowledge through learning” on the other. In the case of Singapore, in particular, I emphasize the crucial role of “learning to learn.” These cases reveal that reasonably good institutional “islands” can be highly effective when created for specific purposes, as distinct from an overhaul of the entire institutional structure. This chapter also highlights the important role that the development of physical infrastructure plays as an instrument of industrial strategy and policies.6

1.5.3 Learning Capacity for Quality Growth

Chapter 4 aims to provide insights into effective approaches to strengthen learning capacities and create a learning society for quality growth. First, it presents an overview of the literature on the critical importance of learning and innovation for growth and development. In particular, it discusses approaches to initiate and maintain momentum and scale-up the learning process, drawing from cases of international cooperation for capacity development. These cases are analyzed from a ‘learning perspective.’ I do so by examining five outstanding cases of highly varied approaches, which I classify into two categories: learning a specific capacity/capability and learning to learn. The case studies pertain to (i) small-scale farmers in horticulture in Kenya; (ii) rural infrastructure development in Bangladesh; (iii) rural livelihood improvement (seikatsu kaizen) programs in Japan and some developing countries; (iv) the One Village, One Product (OVOP) initiative in Japan and its dissemination to Thailand and Malawi; and (v) Kaizen, ‘Just in Time’ (JIT), Total Quality Management (TQM), and so forth, in Japan, the United States, Singapore, and some other countries. This last point, case (v), receives the greatest attention.

I identify several common features of these different approaches, e.g.: (i) easy entry points are available to initiate the learning process; (ii) the costs and risks are low; (iii) the focus is on learning by doing and mutual learning to cocreate innovative solutions; and (iv) learning makes an intrinsic (endogenous) contribution of learning to the particular objectives being pursued. These cases illustrate how learning and the accumulation of knowledge and capabilities play a vital role in quality growth. They have not necessarily produced transformation directly, but have still had a significant impact on the learning process of a society and thereby enabled changes in individuals, companies or organizations, as well as local or regional economies, and even national economies.

1.5.4 Transforming Economies for Jobs and Inclusive Growth

Chapter 5 argues that three strategies are relevant for supporting inclusive growth in the agrarian economies of sub-Saharan Africa: increasing the productivity of staple food crops, diversifying agriculture to higher-value crops while building stronger agro-industry value chains, and promoting light-manufacturing industrialization in conjunction with agricultural development. The total process constitutes a structural transformation that could be triggered, sustained, and accelerated by investments in infrastructure, human capital, technology, and inclusive finance. These strategies for promoting jobs and inclusive growth agendas are mutually reinforcing but must be explicitly articulated. It is clear from past experiences in sub-Saharan Africa that jobs and inclusivity do not necessarily accompany the growth of GDP alone.

The case studies on the three strategies show, first of all, that many successful experiences have confirmed the feasibility of dynamic and inclusive growth in sub-Saharan Africa. Second, they show that human capacity development, especially of farmers, workers, and SME entrepreneurs, is essential. There is a strong interrelationship between the creation of job opportunities on the one hand and the people’s capacity to respond to those opportunities on the other. Capacity development is needed for people as well as institutions. Third, in the seven cases studied, different measures were taken to scale up the impact of programs. Pilot projects have been scaled up to cover geographically wider areas, diversify activities, and disseminate proven technologies and practices from the local to the regional and national levels. In some cases, they have been shared with other countries through South-South cooperation. In many of the cases, the roles of government, public institutions, and public–private partnerships have been important.

1.5.5 Addressing Challenges of Urbanization for Quality of Growth

Industrial structure transformation and urbanization are intrinsically self-reinforcing. Because urbanization is one of the most important enablers of rapid growth, countries that want to grow fast must learn how to make urbanization work well. However, as ADB (2013) argues, there are two challenges related to urbanization: “The first challenge is to foster the growth of high productivity activities that benefit from agglomeration and scale economies in developing-country cities. The second involves managing the likely side effects of the economic success of cities, i.e., urban poverty, pollution, congestion, and high prices of land and housing, as well as regional inequality” (25).

From a quality of growth perspective, one of the effective approaches to address these urban challenges could be “re-urbanization with land readjustment.” Chapter 6 aims to discuss the effectiveness, advantages, and challenges of land readjustment. First, it discusses the main characteristics and relevance of land readjustment for urbanization, drawing from experiences in Japan. The chapter then analyzes how land readjustment could enhance inclusiveness, sustainability, and resilience of urban development. Third, it discusses experiences of land readjustment in developing countries. The chapter provides some substantive insights into recent initiatives and their outcomes. For example, land readjustment was applied to urban slums in Medellin, Colombia, together with several other concurrent measures. This led to substantial improvements within informal settlements in high-risk areas. In general, pro-poor policies, infrastructure for better access to jobs, education and health, and land readjustment could produce synergies and effectively address the challenges faced by urban slums.

1.5.6 Quality Growth Focusing on Environmental Sustainability

‘Transformation and sustainability’ is one of the central themes of the quality growth agenda. Chapter 7 discusses effective approaches toward quality growth, focusing particularly on environmental sustainability. The cases discussed in this chapter, especially those related to the ‘circular economy’ and the ‘green economy,’ demonstrate that inclusive approaches, in which consumers and/or producers as well as other stakeholders, actively participate, is crucial. At the same time, innovative technologies and the accumulation of capabilities are both key aspects. Moreover, easy entry points can be identified in circular economies, such as 3R (reduce, reuse, and recycle) initiatives for both producers and consumers, in Kaizen (or continuous improvement) activities, as well as in green economies.

In cases where natural capital is the main endowment that enables the transformation, one of the key challenges for sustainable growth is to create institutions that are capable of monitoring and managing resources while supporting inclusive growth and poverty reduction through such growth. The activities of these institutions need to be supported by scientific research on the environmental, ecological and social impacts of the transformation, as well as developing effective monitoring systems.

1.5.7 Quality Growth Focusing on Resilience to Disaster Risks

Quality growth is expected to enable people and society to strengthen their resilience. It will also help to transform economies, making them also more resilient. Addressing the risk of disasters is of particular urgency and critical importance for quality of growth, particularly in developing countries. With their financial, technical and social constraints, they are more vulnerable to disasters than developed countries. In Chap. 8, starting with a reflection on the experiences of the East Japan Great Earthquake and Tsunami, as well as the floods that hit Thailand in 2011, I present three levels of capacity needed to deal with possible disasters. I then look at how programs for disaster prevention, called BOSAI, worked in enhancing such capacity and resilience to disasters, taking cases from Central America.

The determinants of learning discussed in Chap. 4 can also be observed in the cases of disaster risk management. Easy entry points and low-cost solutions were identified in BOSAI Projects. First, risk literacy was enhanced, with the focus on making the residents fully understand the risks of their own community and take actions on their own. These experiences confirm that resilience is indeed about learning to live with risks. Effective learning by communities and their members has taken place in BOSAI programs. BOSAI at the community level is effective only when the process is inclusive, whereby all members contribute to and receive benefits from BOSAI activities. This chapter also illustrates how the programs succeeded in mobilizing local knowledge and wisdom, resulting, for example, in a highly indigenous way of flood prevention using locally available materials.

In BOSAI, Taishin, and Gensai Projects, capacity development to strengthen resilience through organizational learning and institution-building took place. As such, learning, including learning to learn, effectively contributed to innovative and inclusive development, enhancing resilience in El Salvador and other Central American countries.

We can confirm that learning, resilient infrastructure, and institutions are, among other things, crucial in the process of transforming societies into more resilient ones.

1.6 Closing Remarks

1.6.1 From Diagnoses to Actions

The key issues, strategies, and case studies discussed in this volume show that quality growth needs to be discussed in the context of transformation, which is the key driver of growth and a determinant of the multiple attributes of quality growth. As discussed in Chaps. 2 and 3, it is clear that the enhancement of endowments, transformation, and quality growth do not take place automatically. These processes are normally endogenous, but they need to be catalyzed or facilitated by well-designed strategies and effective approaches to implement such strategies. Case studies provide insights into such strategies, approaches, and the main actors involved in the process of transformation.

In order to identify appropriate and promising strategies, this volume studies the relationship between essential endowments, transformation, and quality growth (with its attributes intimately related to SDGs) from three angles. First, it discusses strategies for enhancement of each of the three above-mentioned essential endowments as well as strategies to trigger and catalyze transformation given such endowments (Chap. 2). Second, it focuses on outstanding cases of transformation to analyze how essential endowments and other crucial factors interact in the process of transformation (Chap. 3). Third, it studies the case of sub-Saharan Africa, where jobs and inclusivity have not necessarily accompanied the growth of GDP as expected, identifying three strategies to address the challenges they face (Chap. 5).

Insights from case studies of these three chapters suggest that the endowment changes are mainly enabled by the long-term process of learning and accumulation of knowledge and capabilities (or human capital in which learning capacity is embedded), investment in infrastructure and technological innovation, and enhancement of institutions. Case studies illustrate how learning and the accumulation of knowledge and capabilities play a vital role in attaining inclusive, innovative, and quality growth. This confirms the assertion of Stiglitz and Greenwald (2014, 26) that a country’s policies have to be shaped to take advantage of its comparative advantage in knowledge and learning abilities, including its ability to learn and to learn to learn, and to help develop those capacities and capabilities further. Change of endowments is also attained by infrastructure construction and technological innovation. They often trigger or accelerate industrial and agricultural development and transformation. Institutions in general—and new effective institutions in particular—are critical as well. In many cases, reasonably good institutional “islands” created for specific purposes, as distinct from an overhaul of the entire institutional structure, are highly effective.

Needless to say, when the entire population participates in quality growth, they are all likely to benefit. Case studies illustrate how the government or public institutions, as well as public and private partnerships, can catalyze and facilitate the process of transformation and quality growth. Enterprises are among the main protagonists in promoting quality growth. Furthermore, they are now much more conscious about their contribution to the achievement of the SDGs and committed to environmental, social and governance (ESG) investments. It is worth mentioning that Japan’s Development Cooperation Charter considers it important to catalyze private sector investments to contribute to inclusiveness, sustainability, resilience, and capacity building so that such investments facilitate high-quality growth (Cabinet Office, Japan 2015, 13).

1.6.2 Synergies, Tradeoffs, Priorities, and Sequences

Strategies for promoting transformation and quality growth are mutually reinforcing and could produce synergies but must be explicitly articulated. In this regard, it is necessary to recognize that not all attributes of quality of growth and transformation can be achieved simultaneously and in the short term. Synergies, tradeoffs, priorities and sequences could be important for both transformation and quality growth agendas. With their transformational vision, the SDGs aim to achieve diverse goals (attributes of quality growth) and transformation in a comprehensive manner. Long-term vision with a holistic view matters.

For example, in the short term, quality growth could need external resources to assure people of equal access to opportunities through, among others, education and health. At the same time, the necessary resources could be endogenously generated in the medium and long-term through transformation and quality growth, due to increases in tax and other revenues derived from the expansion of industries and other productive activities, urbanization, and so forth. Transformation-led growth is distinct from, for example, commodity boom-led growth. Transformation-led growth could generate further transformation and growth. This implies that a virtuous circle of transformation and high-quality growth could take place. Furthermore, case studies of this volume show that many approaches for attaining quality of growth, especially for learning and learning to learn, do not demand high costs, while risks are low. Moreover, case studies also show that easy entry points are available to initiate the learning process.

1.6.3 Quality Growth Strategy for Each Context

Finally, as the transformation agenda differs between countries with their own distinctive characteristics, measures to transform their economies and attain desired attributes of quality growth may be different. Countries with different characteristics include those with a high proportion of subsistence agriculture, urbanizing economies, early industrializing economies, those caught in the middle-income trap, and so on. There is no standard model of strategies to address challenges of transformation with growth with improved quality.

Notes

  1. 1.

    ADB (2013) explains the significance of this component as follows: “Diversification of the economic structure is probably the most conspicuous feature of economic development, and is a chief difference between it and aggregate economic growth. Upgrading refers to the capacity to produce higher quality, more distinctive, and more complex products. Deepening involves the formation of local linkages and complementarities by creating a robust local supplier base and expanding ancillary services” (4).

  2. 2.

    It should be remembered that the emphasis and priorities in international development cooperation policy have changed significantly since the end of the Cold War. In the last three decades, dominant policy has shifted from macro-oriented structural adjustment to poverty reduction with concrete social sector targets, and then subsequently to a search for a new source of growth (Ohno 2013). As the World Bank (2012) reminds us, the conventional wisdom was then to focus on growth and assume that improved living standards will follow. This is the main tenet behind “growth strategies”, “growth diagnostics” and “binding constraints analysis,” all of which aim to identify and remove obstacles to economic growth (87).

  3. 3.

    This volume uses the terms “industry” and “industrial sector” very broadly to refer not only to the manufacturing sector, but also agro-business, modern agriculture, aquaculture, transport, logistics, tourism, and any other activities that produce goods and services.

  4. 4.

    In relation to these three components, it is worth mentioning that McMillan et al. (2017) define economic transformation as the continuous process of (a) moving labor and other resources from lower- to higher-productivity sectors (structural changes) and (b) raising within-sector productivity growth (4). They explain that transformative within-sector productivity growth happens as a result of shifts amongst firms in a sector as well as shifts within firms and farms through enhanced technologies, such as improved seed varieties and improved management practices such as ‘just in time’ inventory management (3). They propose a framework for measuring transformation in developing countries (12).

  5. 5.

    For ‘framework’ and ‘ingredients,’ see Yanagihara (1997, 9–10).

  6. 6.

    This paragraph draws heavily on Noman and Stiglitz (2015, 17–18).