The concept of an economic system at equilibrium is one of the most fundamental assumptions of neo-classical economics, and the standard theories of international trade rely on this static approach to understand trading patterns. Under certain conditions however, industrial development may largely be a path dependent and hence dynamic process, with initial conditions determining subsequent possible development paths. What a nation produces today may ultimately be a determining factor in what it is capable of producing tomorrow. Conditions that encourage path dependency include, interdependencies of firms and industries, economies of scale, external economies, as well as the dynamic, uncertain and uneven introduction of technology into the production process. This thesis examines existing theories of international trade and industrial development, and then proceeds to develop a theory of path dependency in industrial development.