The Bank's approach to industrialization has changed over time. Through the 1950s and much of the 1960s, the Bank took for granted industrialization strategies based on import substitution. During the 1970s, the intellectual climate on industrialization strategies changed. The newly industrializing countries (NICs) of East Asia rose to prominence and outward-oriented trade policies came to be regarded as central to success. More recently, greater attention has again been focused on the appropriate role of government within a market friendly approach to development. This approach recognizes the role of government in improving the environment for private sector activity through stable macroeconomic policies, development of the financial sector and physical infrastructure, and human resource development. This study looks at the Bank's approach to industrialization through case studies on three Asian economies: Korea, India, and Indonesia. It generally commends the Bank's work on incentive issues and endorses the current emphasis on export-oriented policies and liberalization of highly-distorted economies as necessary conditions for successful industrialization. However, the study argues that not enough attention has been given to the role of capabilities and institutions. In particular, it stresses the importance of developing technological and managerial capabilities as part of a coherent industrial strategy.