New Industrial Policy: Navigating Between Market And Government Failure
AbstractAfter three decades of expulsion, the industrial policy (IP) is again a part of legitimate policy agenda in developed and emerging economies alike. The theoretical case for IP interventions remains valid in the presence of continued market failures enhanced by growing share of international trade and stronger connectedness in the global economy. But dangers of government failures are equally present, either through errors of commission (due to excessive and wrong government intervention) or omission (failure to act and correct the obvious market failures).At the practical policy level the issue is no longer "why" IP is needed, or whether the government should engage in IP, but "how" to design and implement IP measures that would avoid the known pitfalls of the past and help sustain development and obtain desirable economic restructuring. Recent debates (Lin-Chang, Rodrik-Lerner) and thorough literature surveys (Harrison) confirm the need for IP, but recommend a close alignment with comparative advantage (Lin), shift from hard (tariffs, subsidies) to soft IP interventions aimed at increasing productivity whenever possible (Harrison), and suggest avoiding risks of poorly designed IP measures through joint government-private sector "self-discovery" of optimal IP policy parameters not known ex ante (Rodrik). Advanced WTO and bilateral trade arrangements may seriously limit the scope for legitimate new industrial policy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by SAE - Serbian Association of Economists in its journal SAE Journal.
Volume (Year): (2012)
Issue (Month): 1-2 (February)
Contact details of provider:
Postal: Bulevar Mihajla Pupina 147, Dobrinjska 11, Belgrade, Serbia
Phone: +381 11 3613-409; +381 11 2644-980
Fax: +381 11 3629-689
Web page: http://www.ses.org.rs
More information through EDIRC
industrial policy; market failure; government failure; trade; policy neutrality.;
Find related papers by JEL classification:
- E00 - Macroeconomics and Monetary Economics - - General - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ðorđe Kaličanin & Vukašin Kuč, 2012. "COMPLEMENTARITIES BETWEEN THE dEVELOPMENT STRATEGY OF “NIS” ANd THE ENERGY POLICY OF SERBIA," Serbian Association of Economists Journal, SAE - Serbian Association of Economists, SAE - Serbian Association of Economists, issue 7-8, pages 386-398, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Milos Stamatovic).
If references are entirely missing, you can add them using this form.