Economic dualism, capital imports, and the demand for "backward"-sector products

In an open dual economy, the reallocation of factors to the industrial sector is accelerated whenever the region can sell its industrial product on a world market, or can invest at a level greater than domestic savings, by borrowing abroad. The industrialization is slowed, however, by any increase in the demand for 'backward'-sector products, as for example, when such products are demanded as inputs into the industrial production process. In the model presented here, these industrial input requirements are an important determinant of the growth of per capita income and, especially, the borrowing-lending position of a developing region.