Chapter 3: The ladder of economic development revisited – and elaborated
The ‘Flying-Geese’ Theory of Multinational Corporations and Structural Transformation
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The nebulous notion of the ladder of economic development has been defined in terms of a stages-delineated framework á la Schumpeter, consisting of, so far, five stages or rungs (labor-driven, resources-processing, assembly-based, research and development-driven, and information and communication technology -enabled industries) plus an inchoate stage of green and health technology-based growth presently in the making. The first and second rungs (that is, labor-intensive manufacturing and heavy and chemical industries) were developed under Pax Britannica with its strategy of ethnocentric industrialization and ‘kicking away the ladder’ from emerging economies. In contrast, the higher (third through sixth) rungs have come into existence under Pax Americana that has been spreading mass consumerism and ‘providing the ladder’ to the emerging world, for business- and ideology-motivated reasons. In addition to the inter-industry ratcheting-up progression, an intra-industry side-ladder is conceptualized for each rung of inter-industry ladder. This is where cross-border supply chains are embedded to exploit both the ‘endowed’ and the ‘created’ advantages of constituent economies. In the Appendices to Chapter 3, the role of MNCs in industrial take-off and sustained growth is discussed by reproducing three short essays published in the Columbia FDI Perspectives series.

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