Industrialization Strategies in Labor-Abundant Countries

Abstract

To an economist, the most sensible industrialization strategy for a labor-abundant country would be based on the adoption of labor-intensive methods of production within each industry and a labor-intensive pattern of output. According to this prescription, investment in industries that are labor-intensive should be maximized and in those that use scarce resources, minimized. In fact, the industrialization strategies of most labor-abundant countries have emphasized the development of industries which involve the use of scarce skills, capital and foreign exchange. One might well ask why this has been the case? How did it come about? Can this approach be justified? If not, what type of policy should be pursued?…