Automation and Digitalization: A Premature Deindustrialization in Developing Economies

This chapter critically interrogates the profound and disruptive ramifications of rapid technological advancement on the industrialization trajectories of the Global South. As automation and digital technologies progressively displace labor-intensive manufacturing, numerous developing economies confront the paradox of deindustrialization in the absence of having undergone full-scale industrialization—a condition conceptualized as “premature deindustrialization.” This study explores the diffusion of capital-intensive innovations, the restructuring of global value chains, and the concomitant decline in manufacturing employment, all of which subvert conventional models of structural transformation and economic ascent. Drawing on comparative cross-national data, sectorspecific analyses, and illustrative case studies, the research elucidates how automation not only constrains employment creation and deepens income inequality but also intensifies economic dualism within low- and middle-income countries. In response, the study examines a spectrum of policy interventions aimed at aligning technological adoption with inclusive growth—emphasizing strategic investments in human capital, digital infrastructure, and adaptive industrial policy frameworks. Ultimately, the analysis underscores the imperative to reconceptualize development strategies in a digital age where technological disruption increasingly delineates the boundaries of economic possibility and social equity.