suggested the existence of local suppliers of raw materials. Vernon regarded this phenomenon as a process of a further commitment of multinational enterprises into the local economy.

Southeast Asian countries started industrialization just after World War II. Except Thailand, all of them were forced to become colonies of Western countries and depend on monoculture. On the other hand, Western countries aggressively invested in Latin American countries throughout the 1920s, and it was said that the first round of industrialization for establishing local industries for import substitution there had almost drawn to an end just before World War II. The advance of multinational enterprises resulted not only in the increase in employment but also in the introduction of capital which was embodied in technology. Export of their subsidiaries to mother countries also contributed to the local economy. Capital and capitalists, technology, labor, and market are indispensable for industrialization of a country. In most Latin American countries, there were almost all prerequisites for industrialization early on.

In Southeast Asia, industrialization was achieved chiefly by foreign capital. Southeast Asian countries adopted a policy of utilizing foreign capital for carrying out their industrialization. Foreign capital positively responded to the open-arm stance of these countries. Latin American countries started their industrialization earlier than Southeast Asian countries, but the former obviously lagged behind the latter in industrial development. Many economists have been interested in this phenomenon and tried to explain it theoretically.

## Ranis and Sachs

The thesis of Gustav Ranis is the case in point. He has emphasized the difference in the abundance of natural resources between the two regions and noted the existence of the class of landowners who had great interests in the export of primary products. Having abundant natural resources, Latin American countries have been able to earn foreign currencies with the export of these resources. However, Southeast Asian countries have not been in a position to do so. For this reason, there has been no need to foster export-oriented industries in Latin American countries, while it was a must for Southeast Asian countries to foster export-oriented industries, as they had to import crude oil. Since the prices of primary products tend to largely fluctuate according to the world's demand and market, Latin American countries have relaxed the control on export when it became sluggish, and tightened the control when it increased. This is because the government in these countries has been on the side of landowners. Thus, in Latin American countries, protectionism and deregulation have come in turn, hampering the idea of fostering export-oriented industries from coming to stay.

In contrast, in Southeast Asian countries, such a situation that landowners' interests greatly influenced the government policies has never occurred. Instead, they have followed the course of fostering the manufacturing industry using their skilled labor. A shift of emphasis from industries for import substitution to export-oriented industries has been a sort of natural result in Southeast Asian countries, while the change in policy in Latin American countries has been cyclic.

Jeffrey Sachs has noticed that differences of the ratio of the urban population and the form of land possession between the two regions. The ratio of the urban population is high in Latin American countries, while it is low in Southeast Asian countries. In contrast to