Openness and industrialization in developing countries

This paper investigates the relationship between trade policy orientation a nd industrialization. Growth rates of manufacturing value added, rather tha n output growth rates, are related to index of real exchange rate distortio n to establish the superiority of outward-oriented strategies in fostering industrial development. Results suggest developing countries will industria lize faster by adopting outward-oriented trade strategies than by using imp ort-substitution industrialization policies.