ABSTRACT
It is now widely acknowledged in the economics profession that the industrialization strategy of interventionist import substitution, vigorously pursued by many developing countries during the early postwar period, largely misfired. There is, however, no agreement on the appropriate way forward. The mainstream policy advocacy in the neoclassical tradition of development economics sees the removal of government in direct production activities and a shift toward market forces as the appropriate strategy for achieving rapid, robust, and equitable growth (Bhagwati 1994; Krueger 1997; Little 1994). The economists of the “structuralist” persuasion (the revisionists), however, argue for activist and selective public policies tailored to the circumstances of each individual country, while eschewing indiscriminate state intervention, as the only way to industrialization for latecomers (Amsden 1997; Helleiner 1994; Rodrik 2003). Another way of stating this position is that trade policy must be subservient to the avowed aim of rapid industrialization, thus drawing a contrast between allocation of resources based on neutral policies and those based on selective interventions.
