To buttress the importance of ISI in

To buttress the importance of ISI in achieving economic diversification, Irwin (2002) contends that resources become more efficient and productive when diverted away from agriculture and redeployed to manufacturing. Clearly, one of the most crucial challenges that confront the developing economies is the concentration of higher percentage of its workforce in the primary/extractive sectors such as agriculture and labour-intensive mining. As rightly observed by Gerschenkron (1962:26), “in every instance of industrialisation, imitation of the any social pitfall in advanced countries appears in combination with different, indigenously determined elements”, which suggest that the neoliberal ideology being canvassed by the developed country is an epitome of oblivion or paradoxical hypocrisy. Given the circumstantial parameters that surround the adoption of ISI policy by the developing economies, a blanket criticism of this policy by the advanced economies appears to be defeating. Perhaps the most compelling justification for the criticism emanates from what List (1966:368) referred to as “kicking the ladder” of industrialisation away from the less privileged economies. Evidently, if “every change begins from the place one is at now… choices are massively constrained by the legacies of the past” (Schmitz, 2007:16).
4. Research methodology According to previous studies, the importance of trade openness to economic growth is substantial (Kandiero & Chitiga 2003; Klasra 2009). According to these authors, economic openness helps a country to leverage its comparative advantage by specialising in the production of goods and services that yield comparative advantage, while it imports those goods and services that yield comparative disadvantage. Stiglitz (2002) as well as Hill (2014) also buttress this asseveration. However, a few other studies found inconclusive evidence as regards the impact of trade openness on economic growth (Wheeler & Mody, 1992; Ponce, 2006). By definition, economic openness depicts the extent to which an economy is opened to foreign competition, through its active participation in trade and investment. This relationship is largely captured through import/export nexus. In this research, economic openness is proxied by tariff on all imported products (ALTAR). Tariff barrier is chosen as a proxy for economic openness in this study because the application of tariffs is one of the cardinal launchpads of ISI, especially on imported manufactured products. Our choice of tariff barrier (on the demand side) also necessitated the inclusion of subsidy (on the supply side) to the estimation (SUBSY). Subsidy is proxied by total subsidy for all exports. We also introduced trade balance (TRDBAL), which is taken as a nominal value of balance of trade account. Other variables used in this study include employment in agricultural sector (AGRICEM), which is taken as a percentage of total employment. We use consumer price index to proxy inflation (INFLTN), and total government reserve (TTRESV) is used as a proxy for current account balance. This variable is also used to measure government policy on budget deficit (or surplus). Manufacturing value added (MANVADD) is used in this study to gauge the extent of material beneficiation during the periods covered in the study as a way of measuring the contributions of ISI to the industrialisation process of the sampled countries. Furthermore, literature suggests that various measures can be used to measure economic growth. For example, Hicks (1969) as well as other recent scholars (Allen & Ndikumana, 2000; Asiedu, 2002; Chakrabarti, 2003; Asheghian, 2004; Adams, 2009) have used real Gross Domestic Product (GDP) to proxy economic growth. However, Sen (1999) view economic growth from humanity perspective. According to Sen, economic growth is best measured through improvement in human capital development, household poverty reduction, social freedom, political opportunity, population growth and so on. In this study, real GDP is used as a measure of economic growth as the most convenient proxy.