1.2.2 Theory of Unbalanced Growth
Contrary to the theory of balanced growth, in Hirschman's
opinion, the real bottleneck is not the shortage of capital,
but lack of entrepreneurial abilities. Potential entrepreneurs
are hindered in their decision-making by institutional factors:
either group considerations play a -great role and hinder
the potential entrepreneur, or entrepreneurs aim at personal
gains at the cost of others and are thus equally detrimental
to development. In view of the lack of enterpreneurial abilities
there is a need for a mechanism of incentive and pressure
which will automatically result in the required decisions.
According to Hirschman, not a balanced growth should be aimed
at, but rather existing imbalances— whose symptoms are
profit and losses—must be maintained. Investments should
not be spread evenly but concentrated in such projects in
which they cause additional investments because of their backward
and forward linkages without being too demanding on entrepreneurial
abilities. Manufacturing industries and import substitutions
are relevant examples. These first investments initiate further
investments which are made by less qualified entrepreneurs.
Thus, the strategy overcomes the bottleneck of entrepreneurial
ability. The theory gives no hints as to how the attitude
of entrepreneurs and their institutional influence will be
changed in time.