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State Capacity and the Role of Industrial Policy in Automobile Industry: a Comparative Analysis of Turkey and South Korea

Author

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  • Murat A. Yülek

    (Istanbul Commerce University)

  • Kwon Hyung Lee

    (Korea Institute for International Economic Policy)

  • Jungsuk Kim

    (Sejong University)

  • Donghyun Park

    (Asian Development Bank)

Abstract

Automobiles account for a significant share of global output and trade. Since automobile manufacturing is widely considered to be an engine of economic development, a number of countries, including Turkey and South Korea, have pursued industrial policies in the automobile sector, with mixed success. While the two countries started from similar initial conditions and both devised and implemented automobile industrial policies, the outcomes were very different. The Korean automobile sector has far outperformed its Turkish counterpart. The difference in policy outcomes begs an obvious question of why that happened. This paper’s central objective is to find answers to that question by analyzing and comparing industrial policies in the automobile sector. To do so, we develop a list of qualitative and quantitative criteria in order to assess and explain the different outcomes. We base our analysis on a review of the historical development of the automobile sector and policies in both countries. Our analysis suggests that differences in state capacity and hence quality of industrial policies help explain the differential performance of the automobile industry in the two countries.

Suggested Citation

  • Murat A. Yülek & Kwon Hyung Lee & Jungsuk Kim & Donghyun Park, 2020. "State Capacity and the Role of Industrial Policy in Automobile Industry: a Comparative Analysis of Turkey and South Korea," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 307-331, June.
    • Handle: RePEc:kap:jincot:v:20:y:2020:i:2:d:10.1007_s10842-019-00327-y
    DOI: 10.1007/s10842-019-00327-y
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    Cited by:

    1. Mohammed Ahmad S. Al-Shamsi, 2022. "Review of Korean Imitation and Innovation in the Last 60 Years," Sustainability, MDPI, vol. 14(6), pages 1-15, March.
    2. Tamás Szigetvári & Gábor Túry, 2022. "State strategies in promoting automotive manufacturing investments - the case of Hungary and Türkiye," IWE Working Papers 269, Institute for World Economics - Centre for Economic and Regional Studies.
    3. Murat Ali Yülek & K. Ali Akkemik, 2022. "The developmental leader," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 36(2), pages 3-16, November.
    4. Greig Mordue & Erman Sener, 2022. "Upgrading in the Automotive Periphery: Turkey's Battery Electric Vehicle Maker Togg," Development and Change, International Institute of Social Studies, vol. 53(4), pages 760-795, July.
    5. Heman Khouilla & Cécile Bastidon, 2024. "Does increased intellectual property rights protection foster innovation in developing countries? A literature review of innovation and catch‐up," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 1170-1188, March.

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    More about this item

    Keywords

    State capacity; Steering capacity; Policy capacity; Industrial policy; Automotive industry;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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