Introduction: Putting industrialization back into development

Abstract

The focus of the articles in this section is the role of manufacturing-based industrialization in the process of economic development. It would hardly be an exaggeration to say that in the post-World War II period, up to the late 1970s, much of the literature on economic development considered the latter as largely synonymous with industrialization, and in particular the promotion of manufacturing activity by the state (see, for example, Hirschman, 1958; Kaldor, 1967; Lewis, 1955; Prebisch, 1984). Academic courses on economic development would, as standard practice, allocate considerable space to industrialization issues and activist industrialization policies. However, beginning in the early 1980s, with the ascendancy of neo-liberal thinking, this focus began to recede. By the 1990s it had shifted to privatization, liberalization and deregulation, as well as a hands-off approach by the state. By the late 1990s the mainstream academic and policy focus in respect of economic development had again shifted, to issues of poverty and income distribution. This recent shift in focus has not, however, implied a rejection of the neo-liberal approach to economic development. Rather, it has come to be the accepted wisdom that economic development should not be narrowly focused on growth alone, but also on poverty alleviation and income re-distribution. The latter are seen, at least in orthodox circles, as being perfectly consistent with a neo-liberal approach. The most obvious manifestation of this duality of focus is the so-called Poverty Reduction Growth Programmes supported by the IMF and World Bank. The tacit assumption of these programmes, and current orthodoxy, is that private property, the market mechanism, and a competitive environment, are sufficient in themselves to generate rapid and sustainable economic growth in developing countries, although not necessarily sufficient to uplift all sectors, at least not over the short run, due to the presence of price rigidities, information gaps, and general market imperfections. Hence the perceived need for additional attention to be paid to poverty alleviation in the context of orthodox structural adjustment programmes. © Instituteof Social Studies 2005.