Industrialisation strategies in less developed countries: Some lessons of historical experience

Most of the history of industrialisation in the less developed countries (LDCs) of the capitalist world has been examined under two headings: import‐substituting industrialisation (ISI) and export‐orientated industrialisation (EOI). Some of the most influential authors and policy advisers have been moving rapidly to a position of treating these experiences as closed chapters of development economics. The verdict is that’ ISI has not worked (or only in its early stages) and that EOI under liberal policies has been so successful that LDCs in general should follow this route. Our argument is that ISI has indeed led to substantial (static) inefficiency and foreign exchange problems, but that from a dynamic perspective the analyses are still most unsatisfactory ‐for both conceptual and empirical reasons. Second, we suggest that the alleged superiority of EOI is not so much due to the adoption of more ‘rational’ market‐orientated policies, but due to a combination of cyclical and historical factors and to substantial discriminatory state intervention. The paper concludes with some reflections on industrialisation strategies for the 1980s.