The Competitiveness of Capital-Goods Industries in Developing Countries

Barend A. de Vries


In the past two decades developing countries have invested an
increasing proportion of their resources in new industries and the
infrastructure needed to support them. Many of the new industries have
been light, simple and con¬sumer-oriented. But a significant number of
LDC's, mostly the larger or richer ones, have established heavy, more
complex capital-goods industries. Both sectors of industry have been
largely domestic-oriented, although there are some LDC's which have
succeeded in sharply increasing their industrial exports, mostly of
light and simple products. The absence of export success may, in itself,
cast a doubt on the effici¬ency and competitiveness of the new
industries. The question has been raised in several quarters whether, in
fact, the resources spent on industrialization have been well spent or
whether the LDC's could have achieved more growth—in domestic product or
export earnings—by a different design of industrialization or by more
emphasis on other sectors. These questions are of special relevance for
the newly-established capital-goods industries, because:

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