As Figure 3.1 illustrates, a positive relationship exists between the growth of manufacturing value added' (MVA) and of gross domestic product (GDP). Higher productivity growth in the manufacturing sector makes it an important factorfor developing countries to shift activities from agriculture and low productivity services towards manufacturing to achieve growth-enhancing structural transformation (Figure 3.2). In countries that have successfully industrialised, the growth in manufacturing and related services sectors has led to the absorption of large numbers of workers from the agriculture and informal sectors into productive jobs, and has increased the prosperity of those workers' families and communities (UNIDO 2013). Based on the importance of the manufacturing sector, this chapter explores the processes behind industrialisation and how sustainable and inclusive economic development can be achieved through the development of this sector.