Industrialisation by invitation

Sir Arthur Lewis
St. Lucia
Sir Arthur Lewis is St. Lucian
Born to Antiguan parents ( January
23, 1915)
He holds a Bachelor of Commerce
Degree from the London School of Economics
PhD in Industrial Economics from the same institution.
He published a series of articles as Professor at
University of Manchester and later became Professor in
Economics at Princeton University.
Economic Adviser to the Prime Minister of Ghana (1957-1963)
Deputy Managing Director of the UN Special Fund
Vice-Chancellor of the University of the West Indies (1959)
Knighted in 1963
Instrumental in helping to set up the Caribbean Development Bank from
1970 to 1974 where he held the position of Director of the bank
In 1979 he won the Nobel Memorial Prize in Economics, becoming the
first black person to win a Nobel Prize in a category other than peace.
He died June 15, 1991
A study produced by St. Lucian Economist Sir
Arthur Lewis in 1949, following a spate of
Caribbean rebellions due to the prevailing high
level of poverty in the region indicated by high
employment, poor housing and a narrow sector
based on sugar.
Industrialisation by Invitation thesis was offered
as a solution to the problems of Caribbean
development, where an unlimited supply of
labour is ensured which will keep wages down
and thus produce cheaper commodities.
 The
general idea was for Caribbean
governments to encourage multi- national
corporations to establish industrial
enterprises in the region by the provision of
suitable physical plants equipped with
 Agriculture
had reached its limits of internal
and externally profitable cultivation
 The
growth rate of the population was faster
than the growth of agriculture
manufacturing base had to be established
to absorb agricultural output and to create
employment opportunities
A country should specialise in
manufactures to which its resources
are most appropriate and avoid the
"To start manufacturing in a new
country is a formidable enough
problem; therefore countries must
seek manufacturers who are already
established in the market, and try to
persuade them to set up branches in
the new country." These
multinationals would bring with
them the vital access to markets.
These products could be sold to the
dominant industrial markets and to
nearby Latin America.
Jamaica (Sugar and
MNCs such as Tate and
Lyle; Kaiser invited to
manufature sugar
products and mine
UK and American
 Freedom
from US income taxes
 Tax- free repatriation of profits
 Free construction of industrial plants
equipped with utilities
 Duty- free importation of machinery
 10 -15 year tax holidays
 (silence on the issue of low wages paid to
workers in the industrial sector)
1947 Puerto Rico launched
an industrial initiative called
“Operation Bootstrap” (capital
investment increased from $1.4
billion to $24 billion by 1979)
the 1950’s Trinidad launched
its industrialisation by invitation
programme (natural gas
the 1950’s Barbados
launched “Operation Beehive”
(implemented garment
the 1950’s Jamaica invited
North American companies such
as Reynolds, Alcan and Kaiser to
mine bauxite
1. Stimulated new investment
in the region (e.g. Puerto
1. It did not create the level of
employment opportunities
that were envisaged.
2. Fuel a reduction of the high
unemployment situation
(e.g. Barbados garment
2. MNC’s took advantage of the
long tax holidays and lowwage regimes by moving to
other destinations when the
holidays were over. For
example the exit of Intel and
Caribbean Data Services
threw many workers into
absolute poverty.
3. Stimulated the export
sector and earn additional
foreign exchange
4. Encouraged the
establishment of
manufacturing industries by
Caribbean entrepreneurs
5. The industrialisation
programme led to the full
utilisation of physical
3. created a dependence on
North American capital in the
4. Problems for sustainable
5. Most profits were repatriated
to Northern parent

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