Did Lewis' Theory of "Industrialization by Invitation" (Ibi) Lead to Some of the Social, Economic and Financial Problems Being Experienced in the Region?

Topics: Industry, Manufacturing, United States Pages: 2 (494 words) Published: June 24, 2013
Did Lewis' theory of "industrialization by invitation" (IBI) lead to some of the social, economic and financial problems being experienced in the region? Discuss your response. Lewis’ theory of “industrialization by invitation” made a case for the possibility of the creation of a manufacturing sector in the islands in the region, contrary to the ideas proposed by the Moyne Commission. With the overpopulation of the islands, Lewis argued that non-agricultural employment opportunities were required and he saw the manufacturing industry as a means of achieving this goal. Using the theory of comparative cost, Lewis felt that industrialisation would be a viable option for the West Indian islands. He noted, however, that given the fact that that locals lacked adequate knowledge and were relatively inexperienced in this new endeavour, there would have to be a temporary reliance on foreign investors. To attract them, local governments would have to play a very active role by offering various incentives and setting up Industrial Development Corporations. Lewis based his model on Puerto Rico’s Operation Bootstrap.

(Rose, 2002) states that by “early 1960’s the MDCs and some of the LDCs in the region had established the institutional and legal apparatus to accommodate the industrialization development strategy.” There was also an influx of “foreign capital and visible light manufacturing industries” (Rose, 2002). It would seem, therefore that Lewis’ theory was successful since some economic growth was seen by the MDCs. Be that as it may, closer examination would reveal that the smaller islands did not fare as well in their attempts at industrialization. In fact, even with the success of the MDCs, industrialization by invitation achieved negative results. This was because most of the industries developed as a result proved to be capital intensive rather than labour intensive, thus unemployment rates remained high. The increase in rural to urban migration and...

References: Rose, E. A. (2002). Dependency and Socialism in the Modern Caribbean: Superpower Intervention in Guyana, Jamaica and Grenada, 1970-1985. Maryland: Lexington books.
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