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Rethinking Industrial Policy


  • Irfan ul Haque


Despite the hold of the neoliberal orthodoxy on policy making in developing countries, industrial policy remains important for the promotion of industrial development. However, the context for the design of industrial policy has profoundly changed as a result of new rules governing international trade, the rise of global value chains and marketing networks, and other aspects of globalization. Traditionally, the case for industrial policy has been framed in terms of “market failures” but the paper argues that that is not a sufficient basis. After addressing the traditional points of criticism, an attempt is made to outline the “domains” of industrial policy in the current circumstances, especially for industrially lagging countries. As country contexts differ widely there are no satisfactory blueprints for policy making that countries can readily adopt. As in production decisions, considerable ingenuity and innovation is needed in designing policies. This is all the more necessary as the WTO rules have become increasingly stringent and the rise of international trading networks has created new barriers for young firms to enter the world market. These developments have changed the context but not the importance of policy in industrial development. The paper identifies areas where government intervention is needed and can still make a positive difference.

Suggested Citation

  • Irfan ul Haque, 2007. "Rethinking Industrial Policy," UNCTAD Discussion Papers 183, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:dispap:183

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    Cited by:

    1. Wim Naudé, 2011. "Climate Change and Industrial Policy," Sustainability, MDPI, Open Access Journal, vol. 3(7), pages 1-19, July.
    2. Inayat U. Mangla & Muslehud Din, 2015. "The Impact of the Macroeconomic Environment on Pakistan’s Manufacturing Sector," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 241-260, September.
    3. Srinivas, Smita, 2009. "Industry policy, technological change, and the state," MPRA Paper 52691, University Library of Munich, Germany.
    4. Irfan ul Haque, 2015. "Theory at Odds with Best Practice: The Travails of Industrial Policy," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 87-106, September.
    5. Nguyen, Anh & Nguyen, Nhat, 2010. "Vietnam Industrial Policy and Large Economic Groups: A discussion," MPRA Paper 63461, University Library of Munich, Germany.
    6. Irfan ul Haque, 2014. "Toward a Competitive Pakistan: The Role of Industrial Policy," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(Special E), pages 61-90, September.
    7. Gokhan Yilmaz, 2011. "Resurgence of Selective Industrial Policy: What Turkey Needs," Working Papers 2011/3, Turkish Economic Association.
    8. Erkhemchimeg Byambasuren & Almas Heshmati, 2010. "Economic Development in Mongolia," TEMEP Discussion Papers 201053, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Feb 2010.
    9. Biswajit Dhar, 2015. "Industrial Policy: Its Relevance and Currency," Working Papers id:6638, eSocialSciences.

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