ABSTRACT
It is a truth (almost) universally acknowledged that a poor country with a large labour force must be in want of industrialization. There is, though, no subsequent unanimity on the prerequisites and the paths of policy that need to be followed to achieve the goal. The emergence of the newly industrialized countries (NICs), especially those of East Asia, seemed to promise lessons that would be more relevant to the ambitions of most LDCs than the much earlier experience of the advanced capitalist countries, including Japan. Even so, no general theory surfaced with a definitive explanation of what had happened. Henderson and Appelbaum (1992) note the importance of the individual historical legacies of each country and of how they have related to external settings.They observe that foreign investment was useful but not essential and they cite other studies to suggest that the key to late industrialization is the ability to learn and adapt technologies and labour processes from forerunners. This is hardly a dramatic discovery in itself. Mathews (1996), however, has argued that the NICs pursued adaptation and diffusion in ways that moved them up what he calls the ‘development escalator’, without reinforcing dependence on more advanced economies. On the other hand, despite its very rapid increase in spending on research and development, South Korean payments of royalties for foreign technology more than doubled between 1994 and 1996 (Far Eastern Economic Review, 24 July 1997).
