Murphy et al. (1989) is in the spirit of Lewis (1954),
allowing for exports but with costly access to foreign markets. Thus, the central problem
becomes alleviating bottlenecks to labour-intensive exports. Golub et al. (2007) point to the
importance of domestic ‘service links’, i.e. infrastructure and public services, in enabling
developing countries to participate in the international fragmentation of production. Viewed
from this perspective, accelerating growth of the modern sector requires improvement of the
business climate in order to attract FDI and other ‘footloose’ inputs that are critical to global
competitiveness in manufacturing.