ABSTRACT
The kind of picture we have drawn of the characteristics of the typical inflation in underdeveloped countries suggests certain reflections on the relationship of inflation to industrial expansion. This relationship has often been posed in terms of the favourableness or otherwise of inflation to industrial expansion. We have earlier distinguished between inflation considered as an independent phenomenon and as the net result in the field of prices of all the economic phenomena at work in the economy and, following this, we consider it useful to distinguish between the effects of inflation per se and the effects of the economic conditions typically giving rise to inflation. It is with the latter that we are for the moment concerned. The conditions typically causing inflation we have found to be those associated with the unsuccessful defensive inflation. It is, therefore, this case that we now discuss and, again, our discussion is not intended to imply that no other case exists. A further limitation of our discussion is that it relates only to market economies1 in which the bulk of manufacturing industry is in private hands (as in India, Peru and Turkey).
