This paper discusses the experience of late industrializers in harnessing profits through industrial-cum-investment policies for faster accumulation. It is found that the performance of a large number of developing countries which have adopted a strategy of reigniting a dynamic process of capital accumulation and growth through a combination of rapid liberalization, increased reliance on foreign capital and reduced public investment and policy intervention is highly disappointing. The paper also examines the impact of macroeconomic and financial policies on accumulation, employment and growth, and concludes with a discussion of policy priorities.

February 28, 2006.