Industrialization policy and income distribution

More specifically, the objective is to examine the way in which measures that affect access to and price of foreign exchange and imports act on the distribution of income. Attention is given to the effect of policies with respect to exchange rates, tariffs, licensing and other direct controls, and subsidy systems on the extent and manner that the rewards of development are shared among the population. The policy measures in this area have been largely aimed at fostering industrialization in the developing countries. In this sense then the purpose of the paper is to examine how these industrialization policies affect the distribution of income. There are seven parts to the paper. In Part I, some general notions are discussed. These definitions and the statement of some of the obiter dicta provide the point of departure of the paper. Part II discusses the role of industry in the overall income distribution picture and describes a general model that identifies the principal determinants of income distribution over time in the industrial sector. These include rates of investment, wage rates, productivity growth, the composition of demand, foreign trade, and rural industrial activity. Each of these is discussed in the following parts of the paper. The last part, Part VIII, is a summary and a brief review of the policy implication revealed in the various arguments.