This book was not written for those with either a general interest in Brazil or a special interest in its historical development. Much of its value would be lost on anyone not familiar with such terms as “unit income-elasticity of savings,” “high investment multiplier,” and “preferential exchange-rate treatment.” Intended for development specialists, many parts of it assume a thorough schooling in economics, especially in the subtleties of Keynesian and neoclassical economic analysis. Much of its value lies in comparisons between various models of economic development and the experience of the Brazilian capital goods industry, especially the manufacture of heavy engineering products.

On the basis of published and unpublished information, often derived from extensive interviewing, the author scrutinizes the development of this industry as it relates to the overall economic development of Brazil. Many of his most significant findings are at variance with conventional views about development. In particular, his evidence challenges the belief that an insufficient supply of capital goods has constrained capital formation in less-developed countries because most of these have had to depend on an income-inelastic supply of imports.

One of the author’s most significant conclusions is that despite the remarkable record of the capital goods industry in competing successfully with imports, it is unlikely to fill the role of “leading sector” in future Brazilian growth for which it is often proposed. His analysis suggests strongly that the industry has experienced its period of import substitution and can be expected to grow proportionately with national income rather than to provide the considerable stimulus to growth generally expected of an economically viable capital goods industry in a less-developed country.

The author perceptively analyzes the conditions of factor supply to the industry. In addition to dealing with problems concerning the supply of capital, entrepreneurship, and “know how,” he examines with commendable thoroughness the supply of human resources, especially engineers and skilled workers. Too often the literature on development either ignores these most important human inputs or makes erroneous assumptions about them. It is very encouraging that such a penetrating analysis of a key industry devotes fully one-fourth of its space to this vital topic. Nevertheless, I feel that on the basis of experience in this Brazilian industry, the author should not discredit the view that shortages of human skills often constitute “bottlenecks” to development. To be sure, it is interesting that the expansion of this industry was not noticeably restrained by skill shortages. However, this may be explained largely by its heavy use of skilled immigrants and by the special means of borrowing and of upgrading human skills which have been available to foreign firms, a major part of the industry.

In contrast to many other case studies, this one is intelligently associated at many points with the main body of related theoretical and institutional knowledge. In this manner and through his detailed and careful analysis of a key sector, the author has provided significant evidence either for or against many important elements of various theories concerning economic growth.