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Return of industrial policy?

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  • Robert H. Wade
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    Abstract

    For the sake of freedom, economic growth and poverty reduction the state in market economies should limit itself to regulating markets and (sometimes) correcting ‘market failures’. This neoliberal conception has been the near-consensus for the past two to three decades in the West and in western-led international organizations such as the World Bank. But as of recently, the consensus has been challenged by circumstances with which it cannot contend. This article spells out key ideas behind the consensus -- in particular, its rejection of industrial policy. It then argues that the US government has long practised -- to good effect -- a hitherto little noticed type of industrial policy focused neither on the individual firm nor on the geographic region but on networks of firms, and that a (small) change in the American normative climate has occurred post 2008 in favour of a government steering role in markets. Moreover, some middle-income countries, with manufacturing sectors shrinking in the face of East Asian competition, have recently shown renewed interest in industrial policy. Finally, parts of the World Bank have recently begun to operationalize industrial policy, under the banner of ‘building competitive industries’ (industrial policy by another name), as has not been the case since the mid 1980s. The combination of these several forces may herald the emergence of new global norms in favour of a more ‘developmental’ role of the state.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

    Volume (Year): 26 (2012)
    Issue (Month): 2 (November)
    Pages: 223-239

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    Handle: RePEc:taf:irapec:v:26:y:2012:i:2:p:223-239

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    Cited by:
    1. Karl Aiginger, 2014. "Industrial Policy for a sustainable growth path," WWWforEurope Policy Paper series 13, WWWforEurope.
    2. Ben Fine & Elisa Van Waeyenberge, 2013. "A Paradigm Shift that Never Will Be?: Justin Lin’s New Structural Economics," Working Papers 179, Department of Economics, SOAS, University of London, UK.
    3. Kalinowski, Thomas, 2013. "Crisis management and the varieties of capitalism: Fiscal stimulus packages and the transformation of East Asian state-led capitalism since 2008," Discussion Papers, Project Group Modes of Economic Governance SP III 2013-501, Social Science Research Center Berlin (WZB).
    4. Mario Pianta, 2014. "An industrial policy for Europe," Working Papers, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini 1401, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2014.
    5. Annamaria Simonazzi & Andrea Ginzburg & Gianluigi Nocella, 2013. "Economic relations between Germany and southern Europe," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 37(3), pages 653-675.
    6. Farla, Kristine, 2012. "Industrial policy for growth," MERIT Working Papers 039, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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