Interactions between Industrialization and Exports

Abstract

The main effects of different types of trade and development strategy on industrial growth and structure are examined. The analytical approach treats internal and external factors together in an interindustry framework. The method takes advantage of information collected for this purpose and can encompass production functions and factor use by sector to provide a more complete analysis of the sources of growth and structural change. Although import substitution is an important feature of early stages of industrialization in all developing countries, it can be accelerated or retarded by trade policy. The later stage of expansion of manufactured exports is more susceptible to policy influence and is shown to have a large effect on the subsequent course of industrial development. The development of manufactured exports appears even more important as a source of foreign exchange than as a source of demand because it provides one of the principal means of exploiting comparative advantage and of avoiding balance of payments bottlenecks. Two tables display indicators of structure and growth and sources of growth in manufacturing output. Three figures display sources of increase in light and heavy industry and sources of increase in machinery. 7 references.

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