Chapter 2 

 INDUSTRIALIZATION 



INTRODUCTION 

 The Role of Technology 



Since the early 1970s, leaders of developing 

 nations have been emphasizing the key role played by 

 technology in industrial development and in related 

 programs for generating employment and expanding trade. 

 Previously, they had put greater stress on increasing 

 stocks of capital and physical infrastructure. This 

 new emphasis on technology has substantial basis. 

 Technology — definable as the application of useful 

 knowledge to felt needs — is an important determinant of 

 economic growth in all major industrialized nations. 



Growing interest in technology for 

 industrialization coincides with the firmly held belief 

 among many policymakers in developing nations that 

 industrialization is a precondition of national 

 economic well-being, adequate employment, and national 

 autonomy. While it is possible to question the 

 validity of such a generalization on analytical grounds 

 (for example, in a developing country with strong 

 comparative advantage in world markets for mineral or 

 agricultural products) , the belief itself is 

 sufficiently rooted in the economic history of the 

 presently industrialized countries as to stand beyond 

 challenge. Hence the logic that technology will foster 

 industrialization, increase employment, and stimulate 

 trade, thus leading to improved economic well-being, 

 has become a dominant theme. 



Coincident with this opinion is a strong 

 dissatisfaction in many developing countries with the 

 small proportion of total industrial production that 

 takes place in the Third World. Although the 

 industrial sector has grown rapidly over the past two 

 decades in a significant number of developing nations, 



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