THE LEADING SECTOR DEVELOPMENT STRATEGY AND THE IMPORTANCE OF INSTITUTIONAL REFORM: A REINTERPRETATION

Abstract

The Leading Sector interpretation of development originates from the observation that all multisectoral economies exhibit a certain degree of intersectoral interdependence, through either the incomes generated in each sector and the corresponding final demand for other products, or through interindustry relations. The sectors in such an economy grow at different rates, as determined by the product of the appropriate income elasticities of demand and the overall growth rate, the latter factor being the weighted sum of the sectoral rates. However in a stagnant economy, as opposed to a dynamic one, even the fastest growing sectors are undynamic. To increase the overall growth rate, the foremost proponents of the leading strategy— Hirschman and Currie—recommend an increase in the growth rate of a few, key, potentially dynamic sectors; then the rest of the economy will be pulled along through the intersectoral relations.

Citation

HANSON, J.A. (1976), "THE LEADING SECTOR DEVELOPMENT STRATEGY AND THE IMPORTANCE OF INSTITUTIONAL REFORM: A REINTERPRETATION", Journal of Economic Studies, Vol. 3 No. 1, pp. 1-12. https://doi.org/10.1108/eb008057