Structuralist Approach To Industrialization

Not until the 1980s most governments imposed market restricting regulations and intervened deeply in their states domestic economy. It was in the mid 1980s that governments such as the Sub-Saharan African countries, China, India, Mexico, Latin America decided to rejoin the global trade system and open their markets to foreign competitors. This was because they felt that GATT was bias so through the united union they created new international trade rules that will be more efficient and beneficial towards industrialization in developing countries.

Before the First World War, independent developing countries and those under colonial powers believed in liberal trade policies and exported their agricultural products to developed industrialized countries

Developing world economy is not flexible enough because it is difficult for people to adapt to a new system and most resources seem to get stucked in their current sectors (Oatley 2008: 123). There were two problems associated with the limitation of investment in the manufacturing industries and they are; the complementary demand and pecuniary external economies. The Structuralists in identifying the above mentioned coordination problems also provided solutions to the problems. They advocated the solution to be a state-led big push, where the state intervenes in the economy because the market cannot bring about the necessary coordination for investments in the manufacturing industries. The Structuralists believe that international trade gives little or no advantage to developing countries. They also elaborated on “the differences in income elasticity of demand between the primary commodities and industrial goods” (Oatley 2008: 125). Engels law states “that people will spend little out of their total income on food and other primary commodities as their incomes rises” (Oatley 2008:

And its strategy was a simple logic that “countries would industrialize by substituting domestically produced goods for manufactured items they had previously imported” (Oatley 2008: 126). Structuralists argue that developing countries need to industrialize before they can gain from trade with other advanced industrialized countries. The import substitution industrialization failed due to the fact that it was expensive. Although the structuralism and import substitution industrialization have emphasized faith in the state and shunned the market for development strategies, neoliberalism has total faith in the market and a lot of skepticism of the state because they believe that the state cannot allocate resources more efficiently as the market would do. Neoliberalism argue that there should be no protectionism and government should not intervene in the economy of the state, that there should be lower tariffs and also that the economy by producing industries that would produce for the world market. Around the world one can see that Neoliberalism has influenced policies. In the developing countries, their economies are now open to imports as there has been reduction in tariffs and other trade barriers, state-owned industries have been privatized, emphasis on production for domestic market is now for the