Normalizing Industrial Policy

The theoretical case for industrial policy is a strong one. The market failures that industrial policies target in markets for credit, labor, products, and knowledge have long been at the core of what development economists study. The conventional...

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Bibliographic Details
Main Author: Rodrik, Dani
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2017
Subjects:
BID
GDP
TAX
WTO
Online Access:http://documents.worldbank.org/curated/en/524281468326684286/Normalizing-industrial-policy
http://hdl.handle.net/10986/28009
id okr-10986-28009
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic ACCOUNTABILITY
ACCOUNTING
ADVERSE EFFECTS
AGENCY PROBLEMS
AGRICULTURE
ALLOCATION
ALTERNATIVE USE
ANTI-CORRUPTION
ASSETS
ASYMMETRIC INFORMATION
BANK CREDIT
BANK LENDING
BANKS
BARGAINING
BENCHMARKING
BENCHMARKS
BENEFICIARIES
BENEFICIARY
BID
BUSINESS CYCLE
BUSINESSMEN
CENTRAL BANK
CENTRAL BANK INDEPENDENCE
CLIMATE
CLIMATE CHANGE
COLLAPSE
COLLATERAL
COLLECTIVE ACTION
COMMERCIAL BANKS
COMPETITIVENESS
CONFIDENCE
CONSUMER PROTECTION
COORDINATION FAILURES
CORRUPTION
COST-BENEFIT
COST-BENEFIT ANALYSIS
CREDIT CONSTRAINT
CREDIT CONSTRAINTS
CREDIT MARKET
CREDIT PROGRAM
CREDIT SUBSIDIES
CREDITORS
CURRENCY
CURRENCY DEPRECIATION
DEBT
DEMOCRACY
DEREGULATION
DEVELOPING COUNTRIES
DEVELOPING COUNTRY
DEVELOPMENT BANK
DEVELOPMENT ECONOMICS
DEVELOPMENT STRATEGY
DIMINISHING RETURNS
DIRECTED CREDIT
DIVERSIFIED PORTFOLIO
DOMESTIC PRODUCTION
DYNAMICS OF GROWTH
ECONOMETRICS
ECONOMIC ACTIVITY
ECONOMIC DEVELOPMENT
ECONOMIC DIVERSIFICATION
ECONOMIC GROWTH
ECONOMIC HISTORY
ECONOMIC OUTCOMES
ECONOMIC PERFORMANCE
ECONOMIES OF SCALE
EQUIPMENT
EXCHANGE RATE
EXPENDITURES
EXPORT PERFORMANCE
EXPORTS
EXTERNAL FINANCE
EXTERNALITIES
FACE VALUE
FEASIBILITY
FEASIBILITY STUDIES
FINANCIAL LOSSES
FINANCIAL MARKET
FINANCIAL MARKETS
FIRM PERFORMANCE
FISCAL POLICIES
FISCAL POLICY
FOREIGN DIRECT INVESTMENT
FOREIGN INVESTMENT
FOREIGN INVESTORS
GDP
GDP PER CAPITA
GLOBALIZATION
GOOD GOVERNANCE
GOVERNMENT INTERVENTION
GOVERNMENT POLICY
GOVERNMENT SUPPORT
GROWTH RATE
GROWTH THEORY
HOLDING
HOST COUNTRIES
HUMAN CAPITAL
IMPORT SUBSTITUTION
IMPORTS
INCOME
INCOME LEVELS
INFANT INDUSTRY ARGUMENT
INFLATION
INFORMATIONAL ASYMMETRIES
INFORMATIONAL ASYMMETRY
INITIATIVE
INNOVATION
INNOVATIONS
INSTRUMENT
INSURANCE
INTELLECTUAL PROPERTY
INTEREST RATES
INTERNATIONAL BANK
INTERNATIONAL DEVELOPMENT
INVESTING
INVESTMENT BANK
INVESTMENT CLIMATE
INVESTMENT FINANCE
INVESTMENT OPPORTUNITIES
JOBS
LABOR MARKET
LABOR TURNOVER
LAWS
LOW UNEMPLOYMENT
MACROECONOMIC INSTABILITY
MACROECONOMIC POLICIES
MACROECONOMIC STABILIZATION
MACROECONOMICS
MARGINAL COSTS
MARKET ANALYSTS
MARKET DISCIPLINE
MARKET ENVIRONMENTS
MARKET FAILURE
MARKET FAILURES
MARKET SHORTCOMINGS
MICROFINANCE
MINISTER
MONETARY POLICY
MULTINATIONAL
MULTINATIONALS
NATIONAL OUTPUT
OPPORTUNITY COST
OUTPUTS
PENSION
PENSION SYSTEMS
PENSIONS
PERFORMANCE STANDARDS
POLICY MAKERS
POLICY RESPONSE
POLITICAL ECONOMY
POLITICIAN
POLITICIANS
PORTFOLIO
POSITIVE EFFECTS
POSITIVE EXTERNALITIES
POTENTIAL INVESTMENT
PREFERENTIAL
PRINCIPAL-AGENT
PRIVATE INVESTMENT
PRIVATE LENDERS
PRIVATIZATION
PROCUREMENTS
PRODUCTION COSTS
PRODUCTIVITY
PRODUCTIVITY GROWTH
PROPERTY RIGHTS
PUBLIC FINANCES
PUBLIC INFORMATION
REAL EXCHANGE RATE
REAL EXCHANGE RATES
REAL WAGES
RELATIVE PRICE
REMEDIES
REMEDY
REMITTANCES
RENEGOTIATION
RENTS
RESOURCE ALLOCATION
RETURN
RETURNS
RISK CAPITAL
RISK MARKETS
SAFETY
SAFETY NETS
SOCIAL COHESION
SOURCE OF CREDIT
STOCKS
STRUCTURAL CHANGE
SUPPLIERS
TAX
TAX CODE
TAX CREDITS
TAX INCENTIVES
TAX REGIME
TAX TREATMENT
TOTAL FACTOR PRODUCTIVITY
TRADE BARRIERS
TRADE LIBERALIZATION
TRADE POLICIES
TRADE PROTECTION
TRANSPARENCY
TURNOVER
UNDERVALUATION
UNEMPLOYED
UNEMPLOYMENT
UNSKILLED LABOR
VALUE ADDED
WAGES
WHITE ELEPHANTS
WITHDRAWAL
WORLD TRADE ORGANIZATION
WTO
spellingShingle ACCOUNTABILITY
ACCOUNTING
ADVERSE EFFECTS
AGENCY PROBLEMS
AGRICULTURE
ALLOCATION
ALTERNATIVE USE
ANTI-CORRUPTION
ASSETS
ASYMMETRIC INFORMATION
BANK CREDIT
BANK LENDING
BANKS
BARGAINING
BENCHMARKING
BENCHMARKS
BENEFICIARIES
BENEFICIARY
BID
BUSINESS CYCLE
BUSINESSMEN
CENTRAL BANK
CENTRAL BANK INDEPENDENCE
CLIMATE
CLIMATE CHANGE
COLLAPSE
COLLATERAL
COLLECTIVE ACTION
COMMERCIAL BANKS
COMPETITIVENESS
CONFIDENCE
CONSUMER PROTECTION
COORDINATION FAILURES
CORRUPTION
COST-BENEFIT
COST-BENEFIT ANALYSIS
CREDIT CONSTRAINT
CREDIT CONSTRAINTS
CREDIT MARKET
CREDIT PROGRAM
CREDIT SUBSIDIES
CREDITORS
CURRENCY
CURRENCY DEPRECIATION
DEBT
DEMOCRACY
DEREGULATION
DEVELOPING COUNTRIES
DEVELOPING COUNTRY
DEVELOPMENT BANK
DEVELOPMENT ECONOMICS
DEVELOPMENT STRATEGY
DIMINISHING RETURNS
DIRECTED CREDIT
DIVERSIFIED PORTFOLIO
DOMESTIC PRODUCTION
DYNAMICS OF GROWTH
ECONOMETRICS
ECONOMIC ACTIVITY
ECONOMIC DEVELOPMENT
ECONOMIC DIVERSIFICATION
ECONOMIC GROWTH
ECONOMIC HISTORY
ECONOMIC OUTCOMES
ECONOMIC PERFORMANCE
ECONOMIES OF SCALE
EQUIPMENT
EXCHANGE RATE
EXPENDITURES
EXPORT PERFORMANCE
EXPORTS
EXTERNAL FINANCE
EXTERNALITIES
FACE VALUE
FEASIBILITY
FEASIBILITY STUDIES
FINANCIAL LOSSES
FINANCIAL MARKET
FINANCIAL MARKETS
FIRM PERFORMANCE
FISCAL POLICIES
FISCAL POLICY
FOREIGN DIRECT INVESTMENT
FOREIGN INVESTMENT
FOREIGN INVESTORS
GDP
GDP PER CAPITA
GLOBALIZATION
GOOD GOVERNANCE
GOVERNMENT INTERVENTION
GOVERNMENT POLICY
GOVERNMENT SUPPORT
GROWTH RATE
GROWTH THEORY
HOLDING
HOST COUNTRIES
HUMAN CAPITAL
IMPORT SUBSTITUTION
IMPORTS
INCOME
INCOME LEVELS
INFANT INDUSTRY ARGUMENT
INFLATION
INFORMATIONAL ASYMMETRIES
INFORMATIONAL ASYMMETRY
INITIATIVE
INNOVATION
INNOVATIONS
INSTRUMENT
INSURANCE
INTELLECTUAL PROPERTY
INTEREST RATES
INTERNATIONAL BANK
INTERNATIONAL DEVELOPMENT
INVESTING
INVESTMENT BANK
INVESTMENT CLIMATE
INVESTMENT FINANCE
INVESTMENT OPPORTUNITIES
JOBS
LABOR MARKET
LABOR TURNOVER
LAWS
LOW UNEMPLOYMENT
MACROECONOMIC INSTABILITY
MACROECONOMIC POLICIES
MACROECONOMIC STABILIZATION
MACROECONOMICS
MARGINAL COSTS
MARKET ANALYSTS
MARKET DISCIPLINE
MARKET ENVIRONMENTS
MARKET FAILURE
MARKET FAILURES
MARKET SHORTCOMINGS
MICROFINANCE
MINISTER
MONETARY POLICY
MULTINATIONAL
MULTINATIONALS
NATIONAL OUTPUT
OPPORTUNITY COST
OUTPUTS
PENSION
PENSION SYSTEMS
PENSIONS
PERFORMANCE STANDARDS
POLICY MAKERS
POLICY RESPONSE
POLITICAL ECONOMY
POLITICIAN
POLITICIANS
PORTFOLIO
POSITIVE EFFECTS
POSITIVE EXTERNALITIES
POTENTIAL INVESTMENT
PREFERENTIAL
PRINCIPAL-AGENT
PRIVATE INVESTMENT
PRIVATE LENDERS
PRIVATIZATION
PROCUREMENTS
PRODUCTION COSTS
PRODUCTIVITY
PRODUCTIVITY GROWTH
PROPERTY RIGHTS
PUBLIC FINANCES
PUBLIC INFORMATION
REAL EXCHANGE RATE
REAL EXCHANGE RATES
REAL WAGES
RELATIVE PRICE
REMEDIES
REMEDY
REMITTANCES
RENEGOTIATION
RENTS
RESOURCE ALLOCATION
RETURN
RETURNS
RISK CAPITAL
RISK MARKETS
SAFETY
SAFETY NETS
SOCIAL COHESION
SOURCE OF CREDIT
STOCKS
STRUCTURAL CHANGE
SUPPLIERS
TAX
TAX CODE
TAX CREDITS
TAX INCENTIVES
TAX REGIME
TAX TREATMENT
TOTAL FACTOR PRODUCTIVITY
TRADE BARRIERS
TRADE LIBERALIZATION
TRADE POLICIES
TRADE PROTECTION
TRANSPARENCY
TURNOVER
UNDERVALUATION
UNEMPLOYED
UNEMPLOYMENT
UNSKILLED LABOR
VALUE ADDED
WAGES
WHITE ELEPHANTS
WITHDRAWAL
WORLD TRADE ORGANIZATION
WTO
Rodrik, Dani
Normalizing Industrial Policy
geographic_facet El Salvador
South Africa
Uruguay
relation Commission on Growth and Development Working Paper;No. 3
description The theoretical case for industrial policy is a strong one. The market failures that industrial policies target in markets for credit, labor, products, and knowledge have long been at the core of what development economists study. The conventional case against industrial policy rests on practical difficulties with its implementation. Even though the issues could in principle be settled by empirical evidence, the evidence to date remains uninformative. Moreover, the conceptual difficulties involved in statistical inference in this area are so great that it is hard to see how statistical evidence could ever yield a convincing verdict. A review of industrial policy in three non-Asian settings El Salvador, Uruguay, and South Africa highlights the extensive amount of industrial policy that is already being carried out and frames the need for industrial policy in the specific circumstances of individual countries. The traditional informational and bureaucratic constraints on the exercise of industrial policy are not givens; they can be molded and rendered less binding through appropriate institutional design. Three key design attributes that industrial policy must possess are embeddedness, carrots-and-sticks, and accountability.
format Working Paper
author Rodrik, Dani
author_facet Rodrik, Dani
author_sort Rodrik, Dani
title Normalizing Industrial Policy
title_short Normalizing Industrial Policy
title_full Normalizing Industrial Policy
title_fullStr Normalizing Industrial Policy
title_full_unstemmed Normalizing Industrial Policy
title_sort normalizing industrial policy
publisher World Bank, Washington, DC
publishDate 2017
url http://documents.worldbank.org/curated/en/524281468326684286/Normalizing-industrial-policy
http://hdl.handle.net/10986/28009
_version_ 1764465955509895168
spelling okr-10986-280092021-04-23T14:04:46Z Normalizing Industrial Policy Rodrik, Dani ACCOUNTABILITY ACCOUNTING ADVERSE EFFECTS AGENCY PROBLEMS AGRICULTURE ALLOCATION ALTERNATIVE USE ANTI-CORRUPTION ASSETS ASYMMETRIC INFORMATION BANK CREDIT BANK LENDING BANKS BARGAINING BENCHMARKING BENCHMARKS BENEFICIARIES BENEFICIARY BID BUSINESS CYCLE BUSINESSMEN CENTRAL BANK CENTRAL BANK INDEPENDENCE CLIMATE CLIMATE CHANGE COLLAPSE COLLATERAL COLLECTIVE ACTION COMMERCIAL BANKS COMPETITIVENESS CONFIDENCE CONSUMER PROTECTION COORDINATION FAILURES CORRUPTION COST-BENEFIT COST-BENEFIT ANALYSIS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT PROGRAM CREDIT SUBSIDIES CREDITORS CURRENCY CURRENCY DEPRECIATION DEBT DEMOCRACY DEREGULATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT BANK DEVELOPMENT ECONOMICS DEVELOPMENT STRATEGY DIMINISHING RETURNS DIRECTED CREDIT DIVERSIFIED PORTFOLIO DOMESTIC PRODUCTION DYNAMICS OF GROWTH ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC DIVERSIFICATION ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC OUTCOMES ECONOMIC PERFORMANCE ECONOMIES OF SCALE EQUIPMENT EXCHANGE RATE EXPENDITURES EXPORT PERFORMANCE EXPORTS EXTERNAL FINANCE EXTERNALITIES FACE VALUE FEASIBILITY FEASIBILITY STUDIES FINANCIAL LOSSES FINANCIAL MARKET FINANCIAL MARKETS FIRM PERFORMANCE FISCAL POLICIES FISCAL POLICY FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS GDP GDP PER CAPITA GLOBALIZATION GOOD GOVERNANCE GOVERNMENT INTERVENTION GOVERNMENT POLICY GOVERNMENT SUPPORT GROWTH RATE GROWTH THEORY HOLDING HOST COUNTRIES HUMAN CAPITAL IMPORT SUBSTITUTION IMPORTS INCOME INCOME LEVELS INFANT INDUSTRY ARGUMENT INFLATION INFORMATIONAL ASYMMETRIES INFORMATIONAL ASYMMETRY INITIATIVE INNOVATION INNOVATIONS INSTRUMENT INSURANCE INTELLECTUAL PROPERTY INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INVESTING INVESTMENT BANK INVESTMENT CLIMATE INVESTMENT FINANCE INVESTMENT OPPORTUNITIES JOBS LABOR MARKET LABOR TURNOVER LAWS LOW UNEMPLOYMENT MACROECONOMIC INSTABILITY MACROECONOMIC POLICIES MACROECONOMIC STABILIZATION MACROECONOMICS MARGINAL COSTS MARKET ANALYSTS MARKET DISCIPLINE MARKET ENVIRONMENTS MARKET FAILURE MARKET FAILURES MARKET SHORTCOMINGS MICROFINANCE MINISTER MONETARY POLICY MULTINATIONAL MULTINATIONALS NATIONAL OUTPUT OPPORTUNITY COST OUTPUTS PENSION PENSION SYSTEMS PENSIONS PERFORMANCE STANDARDS POLICY MAKERS POLICY RESPONSE POLITICAL ECONOMY POLITICIAN POLITICIANS PORTFOLIO POSITIVE EFFECTS POSITIVE EXTERNALITIES POTENTIAL INVESTMENT PREFERENTIAL PRINCIPAL-AGENT PRIVATE INVESTMENT PRIVATE LENDERS PRIVATIZATION PROCUREMENTS PRODUCTION COSTS PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC FINANCES PUBLIC INFORMATION REAL EXCHANGE RATE REAL EXCHANGE RATES REAL WAGES RELATIVE PRICE REMEDIES REMEDY REMITTANCES RENEGOTIATION RENTS RESOURCE ALLOCATION RETURN RETURNS RISK CAPITAL RISK MARKETS SAFETY SAFETY NETS SOCIAL COHESION SOURCE OF CREDIT STOCKS STRUCTURAL CHANGE SUPPLIERS TAX TAX CODE TAX CREDITS TAX INCENTIVES TAX REGIME TAX TREATMENT TOTAL FACTOR PRODUCTIVITY TRADE BARRIERS TRADE LIBERALIZATION TRADE POLICIES TRADE PROTECTION TRANSPARENCY TURNOVER UNDERVALUATION UNEMPLOYED UNEMPLOYMENT UNSKILLED LABOR VALUE ADDED WAGES WHITE ELEPHANTS WITHDRAWAL WORLD TRADE ORGANIZATION WTO The theoretical case for industrial policy is a strong one. The market failures that industrial policies target in markets for credit, labor, products, and knowledge have long been at the core of what development economists study. The conventional case against industrial policy rests on practical difficulties with its implementation. Even though the issues could in principle be settled by empirical evidence, the evidence to date remains uninformative. Moreover, the conceptual difficulties involved in statistical inference in this area are so great that it is hard to see how statistical evidence could ever yield a convincing verdict. A review of industrial policy in three non-Asian settings El Salvador, Uruguay, and South Africa highlights the extensive amount of industrial policy that is already being carried out and frames the need for industrial policy in the specific circumstances of individual countries. The traditional informational and bureaucratic constraints on the exercise of industrial policy are not givens; they can be molded and rendered less binding through appropriate institutional design. Three key design attributes that industrial policy must possess are embeddedness, carrots-and-sticks, and accountability. 2017-08-28T17:06:00Z 2017-08-28T17:06:00Z 2008 Working Paper http://documents.worldbank.org/curated/en/524281468326684286/Normalizing-industrial-policy http://hdl.handle.net/10986/28009 English en_US Commission on Growth and Development Working Paper;No. 3 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research El Salvador South Africa Uruguay