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In recent decades, trade and international integration enabled a remarkable economic convergence. Several low-income countries leveraged strong export performance to rapidly industrialize and catch up with high-income countries. Despite this achievement, too many firms in developing countries remain poorly positioned to succeed in global markets. At the same time, a new threat is emerging. The automation of industrial production in developed countries¡ªonly accelerated by the COVID-19 pandemic¡ªcould hinder the future growth of export manufacturing in low-income countries.

In this talk, World Bank economist Paulo Bastos will draw on evidence from several recent studies to identify key drivers of firm-level upgrading and industrial development, including entrepreneurial ability, exports, foreign ownership, training, and learning by working. Bastos will then present insights from recent research on the implications of robotization for trade between developed and developing countries. Informed by this evidence, the talk will conclude with a critical discussion of policy options for promoting industrial development and trade-led growth.