Industrialization and employment in developing countries : a comparative study

The low-rate of labour absorption in non-agricultural sectors is one of the key problems facing the economies of developing countries. As more people leave the land there is an increasing demand on other sectors of the economy to provide alternative forms of employment. To date this demand has not been met and, as a result, the already enormous problem of unemploy ment, and of urban unemployment in particular, has been aggravated. Conventional economic explanations of this emphasize the relationship between factor prices and output expansion. Factor price distributions result in overpriced labour and underpriced capital and consequently, output expansion is normally achieved through the adoption of capital intensive technologies rather than the absorption of surplus supply. However, the possibility of testing the accuracy of this thesis has been impeded by the lack of empirical evidence. This book, the first systematic study of its subject, puts this right. Collating information from thirteen different countries it provides a full account of the problematic relationship between industrializa tion and labour absorption in developing countries combined with a detailed analysis of the economic models of this relationship.