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The case for industrial policy : a critical survey


  • Pack, Howard
  • Saggi, Kamal


What are the underlying rationales for industrial policy? Does empirical evidence support the use of industrial policy for correcting market failures that plague the process of industrialization? To address these questions, the authors provide a critical survey of the analytical literature on industrial policy. They also review some recent industry successes and argue that only a limited role was played by public interventions. Moreover, the recent ascendance of international industrial networks, which dominate the sectors in which less developed countries have in the past had considerable success, implies a further limitation on the potential role of industrial policies as traditionally understood. Overall, there appears to be little empirical support for an activist government policy even though market failures exist that can, in principle, justify the use of industrial policy.

Suggested Citation

  • Pack, Howard & Saggi, Kamal, 2006. "The case for industrial policy : a critical survey," Policy Research Working Paper Series 3839, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3839

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    References listed on IDEAS

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    11. Kjetil Bjorvatn & Nicola D. Coniglio, 2007. "On the importance of openness for industrial policy design in developing countries," SERIES 0014, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Feb 2007.
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    17. Martin Ravallion, 2013. "The Idea of Antipoverty Policy," NBER Working Papers 19210, National Bureau of Economic Research, Inc.

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    Economic Theory&Research; ICT Policy and Strategies; Water and Industry; Industrial Management; Markets and Market Access;

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