IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Between Two Coordination Failures: Automotive Industrial Policy in China with a Comparison to Korea

  • Yasheng Huang
Registered author(s):

    For twelve years now, China has attempted to develop and to consolidate its automotive industry through an industrial policy approach closely modeled on that of Korean government in the 1970s. While the growth of the automotive industry has been impressive, government's consolidation attempt has been a failure. This article argues and uses the example of Korea to show that success of automotive industrial policy (AIP) requires two necessary components. One is to overcome a coordination failure on the part of the firms to invest at a socially optimal level. This is the familiar form of market failure and is known as Coordination Failure I (CFI) in this article. The other is to overcome a coordination failure on the part of the firms to restrain entry into the automotive sector, This is known as Coordination Failure 2 (CF2). CF2 is more costly to overcome than CFI in political terms and this asymmetric cost structure explains much of automotive developments in China.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Our checks indicate that this address may not be valid because: 404 Not Found ( [301 Moved Permanently]--> If this is indeed the case, please notify (Laurie Gendron)

    Download Restriction: no

    Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 67.

    in new window

    Length: pages
    Date of creation: 01 Jan 1997
    Date of revision:
    Handle: RePEc:wdi:papers:1997-67
    Contact details of provider: Postal: 724 E. University Ave, Wyly Hall 1st Flr, Ann Arbor MI 48109
    Phone: 734 763-5020
    Fax: 734 763-5850
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wdi:papers:1997-67. 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: (Laurie Gendron)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.