Abstract
This study examined the relationship between industrialisation and poverty in developing countries, using data from 148 nations between 1991 and 2020. Industrialisation is often linked to structural economic changes, where labour shifted from low-productivity sectors like agriculture to higher-productivity sectors such as manufacturing, potentially improving employment and living standards. A fixed-effects model was employed for the analyses. The study aimed to determine whether industrialisation, measured by manufacturing activity, was associated with poverty reduction, using the poverty headcount ratio and poverty gap index as indicators. The results suggest that industrialisation is linked to poverty reduction in developing countries. Also, regional variations were evident. In Asia, industrialisation showed a stronger link to poverty reduction, reflecting the region’s more developed manufacturing sector. In Africa, manufacturing growth was associated with poverty reduction, although the effect was less pronounced, indicating a need for more inclusive policies. In Latin America and the Caribbean, the relationship between industrialisation and poverty was weaker, with economic growth playing a more significant role in reducing poverty. The analysis also showed that industrialisation reduces poverty across income groups, but its impact varies by income level. Lastly, the analysis showed that the 2008 global financial crisis had a notable impact on the relationship between industrialisation and poverty. Overall, this study contributes to the understanding of the impact of industrialisation on poverty reduction in developing countries. The findings highlight the importance of regional and economic contexts in shaping the effectiveness of industrialisation, suggesting that policy approaches should be tailored to specific conditions to promote inclusive industrial growth and reduce poverty effectively.