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Industrial Policy and Vulnerable Capitalism

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  • David Bailey
  • Keith Cowling

Abstract

This paper emphasises the linkages between corporate strategy, the macroeconomy and the role of industrial policy in this macropolicy context. While this is an aspect of industrial policy that is rarely addressed, we suggest that there is, in fact, a real and highly significant complementarity, especially in the context of modern capitalism, with its distinctive features. The underlying premise is that problems cannot be resolved easily directly at the macro level: appropriate industrial policy may be a necessary ingredient in securing better economic performance. Current discussions of exchange rate policies and the major adjustments required for eliminating external imbalances between the USA, China, Japan and Europe would seem to point to this conclusion. This paper emphasises the linkage between corporate strategy, the macroeconomy and the role of industrial policy in this macropolicy context, and points to appropriate policies that aim to rebalance the economy by shifting towards a more diffuse governance structure that deconcentrates strategic decision making and opens up the potential for new forces of dynamism.

Suggested Citation

  • David Bailey & Keith Cowling, 2006. "Industrial Policy and Vulnerable Capitalism," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(5), pages 537-553.
    • Handle: RePEc:taf:irapec:v:20:y:2006:i:5:p:537-553
    DOI: 10.1080/02692170601005481
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    References listed on IDEAS

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    1. Wolff,Edward N., 1987. "Growth, Accumulation, and Unproductive Activity," Cambridge Books, Cambridge University Press, number 9780521251518.
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    Cited by:

    1. Ross Brown & Colin Mason, 2012. "Raising the batting average: Re-orientating regional industrial policy to generate more high growth firms," Local Economy, London South Bank University, vol. 27(1), pages 33-49, February.
    2. Patrizio Bianchi & Sandrine Labory, 2011. "Industrial Policy after the Crisis," Books, Edward Elgar Publishing, number 14127.
    3. Christos N. Pitelis & Pellumb Kelmendi, 2011. "European Industrial Policy: Perspectives, Trends and a Sustainability-focused New Framework," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume II, chapter 2, Edward Elgar Publishing.
    4. Sandrine Labory, 2014. "Determining Industrial Policy in Current Conditions of Competition," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 4, December.

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