One important implication of the discussion in the previous chapters is that, in general, many developing countries find it difficult to run on a balanced development path. Achieving structural equilibrium between investment and consumption and noninflationary economic development is vital for developing countries, although virtually impossible. For developing countries under pressure to accept the effects (good and bad) of globalization, introduce market reforms, and reduce the role of government, the political obstacles to development are phenomenal. Achieving inclusive growth in these circumstances is not easy. Amsden (2007) argues provocatively that the more freedom a developing country has to shape its own policies, the faster its economy will grow.

As Keynes (1936, 320) argued, “the duty of ordering the current volume of investment cannot safely be left in private hands.” For this reason, the strategy of full employment based on stepping up investment requires “planning”, a term that, unfortunately, has acquired a bad name (see, for example, Easterly 2006, 2008), although it is done everywhere. Indeed, most, if not all, medium- and long-term development plans of both developed and developing countries specify the amount of total (public) investment as well as the allocation across sectors.