Balanced or unbalanced ''industrializing industries'' and the theory of the leading sectors: Algeria, 1967-1984

After independence (1962), Algeria embarked on the building of a socialist economy by pursuing a "noncapitalist way" of development. The country followed a command economy through centralized planning and one-party rule. In 1967, the government launched an ambitious industrialization drive. The "industrializing industries" focused on the development of heavy industry at the expense of light industry and agriculture. The study encompasses a theoretical inquiry as well as an empirical analysis of balanced and unbalanced growth strategies. It was assumed that Algeria followed an unbalanced growth strategy. The study tries to substantiate this claim through empirical analysis by developing indexes of imbalance reflecting sectoral dispersions. These indexes are weighted with their sectoral relative share as well as with their sectoral income elasticity of demand. The study tests the relationship between the indexes of imbalance, GDP growth rates, and Per Capita GNP. The results reveal positive and statistically significant correlation coefficients. These results confirm the claim that Algeria followed an unbalanced growth strategy. The analysis reveals that this strategy promotes a high level of Per Capita GNP. The study presents an analytical assessment of the growth-inducing linkage mechanism that took place in the Algerian economy. The "industrializing industries" were expected to trigger higher backward and forward linkages. The latter are derived using interindustrial tables. The study derives the Leontief inverse for the Algerian economy for the years 1983, 1979, and 1974. The study shows that the sectors targeted during the industrialization drive scored high backward linkages. The study also sheds light on GNP growth rates and structural changes that affected the economy.