Notes on the life cycle of state-led industrialization

By Jeffrey D. Sachs

Abstract

For the last half century, a large proportion of the developing world and all of the socialist world relied on state-owned enterprises to accelerate industrial production and investment. That strategy, which may be labeled "state-led industrialization", is now in tatters, with dozens of countries undertaking programs of massive privatization. The theoretical literature is helpful in explaining the collapse of state-led industrialization, but it does not address more adequate early performance of the strategy in the 1950s and 1960s. The historical experience suggests the need for a dynamic approach to state-led industrialization. This paper offers several hypotheses for a dynamic theory.

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