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236 SAIS REVIEW Lewis sets the stage for the other writers, who proceed to reflect on Lewis's statement that much of today's thinking on development is a result of a dialectical process over the past thirty-five years. Irma Adelman confronts the problem of growth versus distribution. Many authors have professed that distribution cannot occur if there is nothing to distribute. Others have argued that "growth first" leads to a vicious cycle of higher and higher levels of capital-intensive industrialization . Adelman reasons that growth and equity can occur simultaneously if the poor are given access to high-productivity jobs before growth actually begins. Adelman has faith that agricultural development can lead industrialization . So does John Mellor, but he delves into the issue more deeply than does Adelman. Mellor feels that the the "Green Revolution," which increased agricultural productivity dramatically in the 1950s and 1960s, may do much to help industrialization, provided national governments play a key role in developing human resources and obtaining capital for infrastructure. Several of the remaining articles deal with the relationship between developing economies and the governments that ostensibly set economic policy for them. Bhagwati defends the export-promotion policies that he helped shape. In response to complaints that export-promotion seems to work best in countries with authoritarian governments, Bhagwati argues that democratic regimes have more trouble dismantling the patronage and controls that would have evolved under import-substitution policies. The real issue of this book is not whether to pursue development, or even how. The predominant theme is the need for more flexibility— practiced by both development agencies and lenders like the World Bank and individual governments — so that they are in a better position to choose technologies and growth patterns that will best suit their political and cultural needs. Multinationals and World Trade: Vertical Integration and the Division of Labour in World Industries. By Mark Casson and Associates. Winchester, Mass.: Allen & Unwin, 1986. 401 pp. $39.95/cloth. Reviewed by Joost Everaert, M.A. candidate, SAIS. By definition, multinational corporations are active in several countries simultaneously . This situation generates intermediate product trade within vertically integrated multinational firms, and the last few decades have seen an important increase in this form of trade. In Multinationals and World Trade Mark Casson and associates take a closer look at the new international division of labor as the main reason for this increase. The first part of the book is a theoretical analysis of the international division of labor, vertical integration, and intra-firm trade. The problem with division of labor theories is that different authors have interpreted the concept in different ways. Casson first tries to develop a more comprehensive theory, starting from the traditional definition of the division of labor as a "reduction of a complete task which every worker must perform to a set of simple tasks in which BOOK REVIEWS 237 individuals can specialize." Then he explains how technological changes have made the division of labor increasingly more sophisticated, and he lists the advantages and disadvantages of the division of labor. Second, he extends his theory to the international division of labor. Fundamental to the international division of labor is the ability of intermediate products to be traded economically. After having explained how intermediate product trade within firms can arise, Casson analyzes why and when this trade is preferred over arm's length trade between firms. Here he uses the concept of vertical integration, describing two theories— profit maximization and bargaining theory— in an attempt to synthesize these theories into a global approach. The findings from the first part of the book are applied to a variety of industry case studies in the second part: motors, bearings, synthetic fibers, tin, copper, bananas, and shipping. Each of these studies is written by an expert in the field. The arguments in Multinationals and World Trade are a significant step towards more comprehensive theories of the international division of labor and vertical integration. Thus it is a useful guide for future research. A second contribution is the use of industry studies as touchstones for the theory developed in the first part of the book. All too often in comparable publications the separation between theory...

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