The rise of automation may therefore accelerate a process that Dani Rodrik termed “premature deindustrialisation” in developing economies.13 This term describes a pattern whereby developing economies see their manufacturing base shrink at a level of income that is far below the level attained by advanced economies before they started to deindustrialise. This means two things.
First, the impact of reshoring and the automation of unskilled manufacturing processes on developing countries’ labour markets could be significant. The International Labour Organization recently estimated that around two-thirds of jobs in the textile, clothing and footwear industry in Indonesia are at risk of automation.14 For Cambodia, the figure is 90%. Second, automation may become a headwind to the catching-up process of developing countries.