Industrial policy after the East Asian crisis - from"outward orientation"to new internal capabilities?
Before East Asia's financial meltdown in the second half of 1997, there appeared to be prospects for an uneasy consensus on the East Asian"miracle", a consensus that recognized the role of the entrepreneurialstate in accelerating industrial development but emphasized the"market-friendly'nature of the state's interventions. After the financial crisis, East Asian policies and institutions are once again under scrutiny - for their failures rather than for their miracles. The author finds that the prospects for a consensus that incorporated the East Asian experience were ill founded. East Asian policymakers emphasized growth through quantitative targets; price signals played a significant but secondary role. The author illustrates these propositions by examining trade policy, industrial conglomerates, and the provision of physical infrastructure. The evolving international consensus on industrial policy, which predates the Asian crisis, emphasizes a hands-off approach in which an activist government plays a reduced role and competition policy plays an important role. But policies emphasizing greater competition and a level playing field - implicitly thought to require less government action - may require more government expertise, not less. If implementing a ten percent export subsidy is difficult, consider the difficulty of determining whether a firm is exercising market power or restraining trade. So the prospect of governments stepping back may be unrealistic. The new consensus also proposes"deep integration", or the adoption of uniform standards in such areas as competition policy and labor and environmental standards. For East Asia, the shift to the international consensus may be appropriate because government-driven growth has declined in intellectual respectability. Also, it may be time to consolidate the gains from the rapid trade-led growth by focusing on creating a stronger incentive structure for efficiently using resources. The current consensus is based on strong priors rather than on solid empirical evidence, however, and the dangers of international uniformity in policy are evident.
|Date of creation:||31 May 1999|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alwyn Young, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 641-680.
- Mody, Ashoka & Yilmaz, Kamil, 1997.
"Is there persistence in the growth of manufactured exports? Evidence from newly industrializing countries,"
Journal of Development Economics,
Elsevier, vol. 53(2), pages 447-470, August.
- Mody, Ashoka & Yilmaz, Kamil & DEC, 1994. "Is there persistence in the growth of manufactured exports? Evidence from newly industrializing countries," Policy Research Working Paper Series 1276, The World Bank.
- Stiglitz, Joseph E, 1996. "Some Lessons from the East Asian Miracle," World Bank Research Observer, World Bank Group, vol. 11(2), pages 151-77, August.
- Ghemawat, Pankaj & Khanna, Tarun, 1998. "The Nature of Diversified Business Groups: A Research Design and Two Case Studies," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 35-61, March.
- Jeffrey Sachs & Andrew Warner, 1995.
"Economic Reform and the Progress of Global Integration,"
Harvard Institute of Economic Research Working Papers
1733, Harvard - Institute of Economic Research.
- Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
- Antonio Estache, 1994. "World Development Report: Infrastructure for Development," ULB Institutional Repository 2013/44144, ULB -- Universite Libre de Bruxelles.
- Goldman, M. & Ergas, H. & Ralph, E. & Felker, G., 1997. "Technology Institutions and Policies. Their Role in Developing Technological Capability in Industry," Papers 383, World Bank - Technical Papers.
- Rodrik, Dani, 1994.
"Taking Trade Policy Seriously: Export Subsidization as a Case Study in Policy Effectiveness,"
CEPR Discussion Papers
900, C.E.P.R. Discussion Papers.
- Dani Rodrik, 1993. "Taking Trade Policy Seriously: Export Subsidization as a Case Study in Policy Effectiveness," NBER Working Papers 4567, National Bureau of Economic Research, Inc.
- Krishna, Kala, 1989.
"Trade restrictions as facilitating practices,"
Journal of International Economics,
Elsevier, vol. 26(3-4), pages 251-270, May.
- Egan, Mary Lou & Mody, Ashoka, 1992. "Buyer-seller links in export development," World Development, Elsevier, vol. 20(3), pages 321-334, March.
- Blomstrom, Magnus & Kokko, Ari, 1997. "How foreign investment affects host countries," Policy Research Working Paper Series 1745, The World Bank.
- Rudiger Dornbusch, 1992. "The Case for Trade Liberalization in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 69-85, Winter.
- Rodrik, Dani, 1997. "The 'paradoxes' of the successful state," European Economic Review, Elsevier, vol. 41(3-5), pages 411-442, April.
- Krugman, Paul R, 1996. "Making Sense of the Competitiveness Debate," Oxford Review of Economic Policy, Oxford University Press, vol. 12(3), pages 17-25, Autumn.
- Mody, Ashoka, 1990. "Institutions and Dynamic Comparative Advantage: The Electronics Industry in South Korea and Taiwan," Cambridge Journal of Economics, Oxford University Press, vol. 14(3), pages 291-314, September.
- Nordhaus, William D, 1997. "Traditional Productivity Estimates Are Asleep at the (Technological) Switch," Economic Journal, Royal Economic Society, vol. 107(444), pages 1548-59, September.
- Alba, Pedro & Claessens, Stijn & Djankov, Simeon, 1998. "Thailand's corporate financing and governance structures," Policy Research Working Paper Series 2003, The World Bank.
- Julio Nogués, 1990. "The experience of Latin America with export subsidies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 126(1), pages 97-115, March.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:2112. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.