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Comparative advantage, industrial policy and the World Bank: back to first principles

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  • Ajit Singh

Abstract

This 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.

Suggested Citation

  • Ajit Singh, 2011. "Comparative advantage, industrial policy and the World Bank: back to first principles," Policy Studies, Taylor & Francis Journals, vol. 32(4), pages 447-460.
    • Handle: RePEc:taf:cposxx:v:32:y:2011:i:4:p:447-460
    DOI: 10.1080/01442872.2011.571859
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    Cited by:

    1. Lectard, Pauline & Rougier, Eric, 2018. "Can Developing Countries Gain from Defying Comparative Advantage? Distance to Comparative Advantage, Export Diversification and Sophistication, and the Dynamics of Specialization," World Development, Elsevier, vol. 102(C), pages 90-110.
    2. Evelyn Dietsche, 2017. "New industrial policy and the extractive industries," WIDER Working Paper Series wp-2017-161, World Institute for Development Economic Research (UNU-WIDER).
    3. Evelyn Dietsche, 2017. "New industrial policy and the extractive industries," WIDER Working Paper Series 161, World Institute for Development Economic Research (UNU-WIDER).
    4. Johannes Schwarzer, 2016. "Trade and Employment. An Overview," Discussion Notes 1601, Council on Economic Policies.
    5. Wolf, Christina, 2023. "Demand-growth in support of structural change: Evidence from Nigeria's formal manufacturing sector," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 347-358.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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