However, rates of productivity growth (defined here as rate of change in value added per employee in constant price terms) appear to be almost inversely related to employment expansion. This needs to be understood more closely. An inverse relation between employment and productivity is quite common in many sectors, especially in primary production, and is even to be expected. However, where increasing returns are thought to prevail (and especially where dynamic returns, as exemplified in Verdoorn's Law which posits a positive relation between rates of output growth and productivity growth) a positive relation would be more expected. These particular manufacturing sectors – electrical machinery, etc. - are generally thought to be characterised by strong increasing returns to scale, especially in the dynamic sense. Therefore this apparent (although clearly not uniform) inverse relation is of some interest.
 
An exactly similar pattern prevails in developed industrial countries for this sector (Chart 8), suggesting that this is not a pattern specific to developing country producers in this sector. Charts 9 and 10 suggest that similar inferences can be made also for the category of "scientific and professional equipment" production in developing and developed countries.

Chart 9 >> Click to Enlarge

Chart 10 >> Click to Enlarge
 
What all this implies is that these sectors – at least over the period under question – were not characterised by dynamic increasing returns in the sense that is usually meant, and that there was therefore a clear trade-off between employment growth and productivity growth. Insofar as there was high employment growth in some countries in these broad sectors, it reflected lower rates of labour-saving technological change as much as demand-led expansion.
 
The other major categories in which developing country manufactured exports have grown significantly and in which developing countries as a whole have increased their shares of world markets, are plastic products and fabricated metal products. Charts 11 and 12 show employment and productivity growth for major developing country exporters. Once again, the inverse relation appears to operate, barring some spectacular outliers such as Thailand in the case of fabricated metal products (in which the high rates of employment and productivity growth are both upon low bases).

Chart 11 >> Click to Enlarge

Chart 12 >> Click to Enlarge
 
What is especially notable is that in all of these supposedly dynamic developing country export sectors, only a handful of countries - and that too, mainly confined to the East/Southeast Asian region – showed very high rates of employment expansion over this period. These were Malaysia, Indonesia, Philippines, and most of all China. Indeed, because China shows relatively high rates of growth of employment, all of which reflect the already huge base of manufacturing employment, it alone accounts for the vast bulk of job creation among all developing countries over this period. And, as we have already mentioned, this very large increase in turn was associated with the fact of import regulation and state control for China's domestic manufacturing sector over most of this period.
 
In sum, the evidence on developing country manufacturing employment, even in the sectors supposedly associated with the highest rates of export expansion and industrial relocation, suggests that net increases in employment generation have been concentrated in very few countries. Most developing countries have actually experienced stagnation or even declines in aggregate manufacturing employment.
 
This in turn reflects technological changes which lead to greater use of labour-saving methods of production which are expressed in high rates of productivity growth in some countries. And this may result from the greater competitive pressures, which have come about simply because of the combination of increased concentration of production and need to generate higher export revenues across all developing countries.