Conclusion

Abstract

The purpose of this study has been to explain the role of domestic politics in the process of industrial transformation. My approach drew partly on earlier studies of industrial transformation: product cycle theory and statist theory. Product cycle theory argues that the rise and decline of industrial sectors is affected by changes in comparative advantage and technology. The economic mechanism of the product cycle is only a partial explanation and needs to be complemented by the role of the state in the selection of targeting sectors. The fact that the state played an important role in the selection of sectors has been recognized in the studies of late developing countries. However, statist theory highlights the role of an autonomous and strong state in leading the market while neglecting the relational aspect of the state with societal groups.