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Return of industrial policy?

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  • Robert H. Wade

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.

Suggested Citation

  • Robert H. Wade, 2012. "Return of industrial policy?," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(2), pages 223-239, November.
  • Handle: RePEc:taf:irapec:v:26:y:2012:i:2:p:223-239
    DOI: 10.1080/02692171.2011.640312
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    Citations

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    Cited by:

    1. Mario Pianta, 2014. "An industrial policy for Europe," Working Papers 1401, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2014.
    2. Kristine Farla, 2015. "Industrial Policy for Growth," Journal of Industry, Competition and Trade, Springer, vol. 15(3), pages 257-282, September.
    3. 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.
    4. Zehavi, Amos & Breznitz, Dan, 2017. "Distribution sensitive innovation policies: Conceptualization and empirical examples," Research Policy, Elsevier, vol. 46(1), pages 327-336.
    5. Amat Adarov & Mario Holzner & Luka Sikic, 2016. "Backwardness, Industrialisation and Economic Development in Europe," wiiw Balkan Observatory Working Papers 123, The Vienna Institute for International Economic Studies, wiiw.
    6. Michael Peneder, 2017. "Competitiveness and industrial policy: from rationalities of failure towards the ability to evolve," Cambridge Journal of Economics, Oxford University Press, vol. 41(3), pages 829-858.
    7. repec:wfo:wstudy:47261 is not listed on IDEAS
    8. Roman Stöllinger & Mario Holzner, 2017. "State Aid and Export Competitiveness in the EU," Journal of Industry, Competition and Trade, Springer, vol. 17(2), pages 203-236, June.
    9. 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).
    10. Küblböck, Karin & Staritz, Cornelia, 2015. "Private sector development: Business plan or development strategy?," Policy Notes 14/2015, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    11. Michael Landesmann & Roman Stöllinger, 2018. "Structural Change, Trade and Global Production Networks," wiiw Policy Notes 21, The Vienna Institute for International Economic Studies, wiiw.
    12. Valeria Cirillo & Dario Guarascio & Mario Pianta, 2014. "Will Europe’s industry survive the crisis? Competitiveness, employment and the need for an industrial policy," Working Papers 1408, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2014.
    13. Patrick Low & Julia Tijaja, 2014. "Effective industrial policies and global value chains," Chapters,in: A World Trade Organization for the 21st Century, chapter 5, pages 110-129 Edward Elgar Publishing.
    14. Karl Aiginger, 2014. "Industrial Policy for a Sustainable Growth Path," WIFO Working Papers 469, WIFO.
    15. Küblböck, Karin & Staritz, Cornelia, 2014. "Private sector development: Business plan or development strategy?," Working Papers 51, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    16. Michael Böheim, 2016. "Environmental Policy as a Core Element of Systemic Industrial Policy to Encourage Sustainable Economic Growth," WIFO Monatsberichte (monthly reports), WIFO, vol. 89(1), pages 39-46, January.
    17. Annamaria Simonazzi & Andrea Ginzburg & Gianluigi Nocella, 2013. "Economic relations between Germany and southern Europe," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 653-675.

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