It has generally come to be accepted that the basic consideration
in selecting industries for development in an under developed economy is the
prospect of external economies. Allyn Young drew attention to this important consideration
in 1928, and Rosenstein Rodan made out in 1943 a strong case of developing
those industries which would create conditions favorable to the growth of other
industries. For example, the development of transport or of sources of fuel and
power influences both the costs and the market possibilities of diverse
manufacturing industries. Similarly , iron and steel and engineering industries
increase the growth and potentiality of industry oil general . From the
standpoint of supply, it thus egress that one of the requirements of investments should be that it creates
additional external economies.
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