Harvard professors predict shift in developing economy labor markets

Harvard University professors Dani Rodrik, Gordon Hanson, and Rohan Sandhu suggest that the traditional economic development model based on export-oriented industrialization is reaching its limits. Due to rising protectionism in developed nations and the increasing capital intensity of manufacturing, developing economies may struggle to create mass, high-quality employment through industry alone.

Research indicates that by 2036, approximately two-thirds of workers in developing economies will hold jobs that do not require a higher education degree and are not internationally tradable. The authors argue that the key to future economic growth will lie in increasing the productivity of the service sector. The projected labor distribution shows that only about 23.9% of the workforce in these regions will hold higher education degrees, with the vast majority engaged in low-productivity roles such as street vending, hospitality, and domestic services.