Comparative advantage, industrial policy and the World Bank: back to first principles
AbstractThis paper provides a critical analysis of the World Bank’s new thinking on industrial policy. After outlining the changing perspectives on industrial policy put forward by the World Bank over the last three decades, we argue that the bank’s economists have taken one step forward (the approval for the enhanced role of the state) but also one if not two steps backward (by strong encouragement to countries to seek their current comparative advantage in pursuing industrial policy). We argue that a critical analysis of the World Bank’s policy stance on industrial policy as on other main issues is essential because of the institution’s hegemony in policy analysis of economic development as well as its conditionality, which may now well include what this paper regards as its inappropriate industrial policy. The analysis in the paper combines classical contributions on international trade and the world economy, relevant economic history, as well as Krugman’s comments on these issues in terms of modern economic analysis. The paper concludes with reflections on the appropriate industrial policy for developing countries that the World Bank should support.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39050.
Date of creation: Mar 2011
Date of revision:
World Bank; industrial policy; economic development; trade;
Other versions of this item:
- Singh, Ajit, 2011. "Comparative advantage, industrial policy and the World Bank: back to first principles," MPRA Paper 53042, University Library of Munich, Germany.
- Singh, A., 2011. "Comparative Advantage, Industrial Policy and the World Bank: Back to First Principles," ESRC Centre for Business Research - Working Papers, ESRC Centre for Business Research wp418, ESRC Centre for Business Research.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
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53897, University Library of Munich, Germany.
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- Justin Lin & Ha-Joon Chang, 2009. "Should Industrial Policy in Developing Countries Conform to Comparative Advantage or Defy it? A Debate Between Justin Lin and Ha-Joon Chang," Development Policy Review, Overseas Development Institute, vol. 27(5), pages 483-502, 09.
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- Calsamiglia, Xavier, 1977. "Decentralized resource allocation and increasing returns," Journal of Economic Theory, Elsevier, vol. 14(2), pages 263-283, April.
- Alex Izurieta & Ajit Singh, 2010. "Does Fast Growth in India and China Help or Harm US Workers?," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 11(1), pages 115-141.
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