Development strategy, viability, and economic convergence

I argue that the failure of most LDCs to converge with DCs in terms of economic performance can be explained largely by their governments' inappropriate development strategies. After World War II, most LDC governments pursued development plans that placed priority on the development of certain capital-intensive industries. I first present, in Section II, a brief overview of recent theoretical developments and debates on economic growth and convergence. In Section III, I discuss the determinants of a firm's viability and an economy's comparative advantages and their relations to the economy's factor endowments. Section IV provides analyses of a government's alternative development strategies, and Section V presents the statistical measurement of a development strategy and the econometric estimation of the impact of the development strategy on economic growth. The policy implications of the analyses are set forth in Section VI.