A Note on the Cross-Country Relationships between Industrialization, Aid and Governance Data

Abstract

This paper examines the basic relationships among cross-country data of manufacturing, growth, governance and institutions, and development aid. We show a clear non-linear relationship between manufacturing and income level, which possibly complicates the discussion on industrialization in the developed and developing countries. Manufacturing growth is confirmed to be negatively correlated with growth volatility, and positively correlated with commonly used governance indicators, i.e., property rights and constraints on the executive power. Aid is found to be negatively correlated with manufacturing growth as Rajan and Subramanian (2008) pointed out.