Introduction

How to develop industries was the main issue in development economics in the 1950s and 1960s, when this new branch of economics was being established. For example, criticizing Rosenstein-Rodan’s (1943) influential “Big Push” or “Balanced Growth” theory, Hirschman (1958) proposed the strategy of focused or “unbalanced” industrialization based on his pioneering analysis of forward and backward linkages among industries. Lewis (1954) and later Fei and Ranis (1964) formulated a model of industrialization which is based upon the transfer of labor force from agriculture to industries. As a comprehensive review of the early literature on industrialization by Sutcliffe (1971) clearly attests to, the issue of industrialization was heatedly and widely debated among a large number of economists and other social scientists. The excitement about this issue, however, quickly faded away in the 1970s, with a major exception being the issue of the appropriate technology or the choice of optimum technology by developing countries from the “shelf” of available technologies in developed countries (Stewart, 1978; White, 1978). This issue, too, lost momentum shortly thereafter. As a result, the discussion of industrialization occupies only a small space in modern textbooks of development economics.1