Is There a Case for Industrial Policy? A Critical Survey

What are the underlying rationales for industrial policy? Does empirical evidence support the use of industrial policy for correcting market failures that plague the process of industrialization? This article addresses these questions through a cri...

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Bibliographic Details
Main Authors:	Pack, Howard, Saggi, Kamal
Format:	Journal Article
Language:	English en_US
Published:	Oxford University Press on behalf of the World Bank 2013
Subjects:	ACCOUNTING ADVERSE EFFECT AGRICULTURE ANALOG ASYMMETRIC INFORMATION AUTOMOBILE AUTOMOTIVE BANKING SECTOR BARRIER TO ENTRY BARRIERS TO ENTRY BASIC BUSINESS CLIMATE BUSINESSES BUYER CAPABILITIES CAPITAL FORMATION CAPITAL MARKET CAPITAL MARKETS CATALYTIC ROLE CELLULAR PHONES CITIES CODES COLLABORATION COMMUNICATION TECHNOLOGY COMPARATIVE ADVANTAGE COMPETITION POLICY COMPETITIVE ADVANTAGE COMPETITIVE MARKET COMPETITIVENESS COMPONENTS COMPUTER HARDWARE COMPUTER SCIENCE COMPUTER SOFTWARE COMPUTER SOFTWARE INDUSTRY COMPUTER SYSTEMS COMPUTER TECHNOLOGY CONSTANT RETURNS TO SCALE CONSUMERS COORDINATION FAILURE COORDINATION FAILURES CORPORATE TAX RATES CREDIBILITY DEVELOPING COUNTRIES DEVELOPMENT BANK DEVELOPMENT ECONOMICS DEVELOPMENT STRATEGIES DIMINISHING RETURNS DIRECTED CREDIT DOMESTIC MARKET DYNAMIC ANALYSIS E-MAIL E-MAIL ADDRESS ECONOMIC DEVELOPMENT ECONOMIC POLICIES ECONOMIC THEORY ECONOMIES OF SCALE ECONOMIES OF SCOPE ELECTRONICS ELECTRONICS INDUSTRY ENTRY BARRIER ENTRY BARRIERS EQUILIBRIUM EXPORTER EXPORTS EXTERNALITIES EXTERNALITY FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL SECTOR FIXED COSTS FOREIGN COMPETITION FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FOREIGN MARKETS FORMAL ANALYSIS FREE TRADE GLOBAL CAPITAL GLOBAL CAPITAL MARKETS GLOBAL TRADE GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT POLICY GOVERNMENT SUBSIDIES GROSS DOMESTIC PRODUCT GROSS DOMESTIC PRODUCT GROWTH GROWTH MODELS GROWTH RATE HIGH TECHNOLOGY HOST COUNTRIES HOST COUNTRY HOST ECONOMY HUMAN CAPITAL IMPLICIT TAX INCREASING RETURNS INCREASING RETURNS TO SCALE INDUSTRIAL DEVELOPMENT INDUSTRIALIZATION INDUSTRY ASSOCIATION INFANT INDUSTRY ARGUMENT INFORMATION ASYMMETRY INFORMATION EXCHANGE INFORMATION INDUSTRY INFORMATION TECHNOLOGY INFORMATIONAL ASYMMETRIES INNOVATION INPUTOUTPUT INSTITUTION INSTRUMENT INTELLECTUAL PROPERTY INTENSIVE GROWTH INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL ECONOMICS INTERNATIONAL FINANCE INTERNATIONAL STANDARDS INTERNATIONAL TRADE INVENTIONS INVESTING INVESTMENT CLIMATE INVESTMENT DECISIONS LDCS LEARNING LOCAL MARKET MANUFACTURING MARGINAL COSTS MARKET DISTORTIONS MARKET ECONOMY MARKET FAILURE MARKET FAILURES MARKETING MONOPOLISTIC COMPETITION MONOPOLY NATIONAL INCOME NETWORKING NETWORKS NEW MARKETS NEW TECHNOLOGIES NEW TECHNOLOGY OLIGOPOLY OPEN ECONOMY OPPORTUNITY COST OUTSOURCING PERFECT COMPETITION PHONES POLITICAL ECONOMY PORTFOLIO POSITIVE EXTERNALITIES POSITIVE FEEDBACK POTENTIAL INVESTORS PRIVATE SECTOR PRODUCT CATEGORIES PRODUCTION COSTS PRODUCTION EFFICIENCY PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROFIT MARGIN PROGRAMMING PROPERTY RIGHTS R&AMP;D RAM RATE OF RETURN REAL TIME RENT SEEKING RESULT RESULTS SAN SATELLITE SATELLITES SEARCH SETTLEMENT SETTLEMENT PROCEDURE SILICON SOFTWARE DEVELOPMENT SOFTWARE ENGINEERING SOFTWARE EXPORTS SOFTWARE INDUSTRY SOFTWARE PROGRAMMERS STOCK MARKETS SUPPLY CHAINS SUPPLY NETWORKS TARGETS TAX TAX INCENTIVES TAX SUBSIDIES TECHNICAL INFRASTRUCTURE TECHNICAL SKILLS TECHNICIANS TECHNOLOGICAL CHANGE TECHNOLOGICAL LEARNING TECHNOLOGY SPILLOVERS TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS TELECOMMUNICATION TELECOMMUNICATION INFRASTRUCTURE TELECOMMUNICATIONS TELECOMMUNICATIONS INFRASTRUCTURE TELEPHONE TELEPHONE LINES TELEVISIONS TIME PERIOD TOTAL FACTOR PRODUCTIVITY TOTAL FACTOR PRODUCTIVITY GROWTH TRADE POLICY TRADE PROTECTION TRADE REGIMES TRADING TRADING SYSTEM TRANSMISSION UNDERLYING PROBLEM USER INTERFACE USES VERTICAL INTEGRATION WAGES WELFARE ECONOMICS WORLD TRADE ORGANIZATION WTO Y2K Y2K PROBLEM
Online Access:	http://documents.worldbank.org/curated/en/2006/07/17591410/case-industrial-policy-critical-survey http://hdl.handle.net/10986/16393

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Summary:	What are the underlying rationales for industrial policy? Does empirical evidence support the use of industrial policy for correcting market failures that plague the process of industrialization? This article addresses these questions through a critical survey of the analytical literature on industrial policy. It also reviews some recent industry successes and argues that public interventions have played only a limited role. Moreover, the recent ascendance and dominance of international production networks in the sectors in which developing countries once had considerable success implies a further limitation on the potential role of industrial policies as traditionally understood. Overall, there appears to be little empirical support for an activist government policy even though market failures exist that can, in principle, justify the use of industrial policy.

Is There a Case for Industrial Policy? A Critical Survey

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