Industrial policy: the untold story of global industrialisation
This article by Nimrod Zalk, Chief Director: Strategic Competitiveness Unit of the dti first appeared in the Business Day of 14 March 2006. Zalk emphasises that there are almost no historical examples of countries that have industrialised without active and robust industrial and trade policies. He also points out that the now-developed economies all industrialised behind substantial tariff barriers and various other forms of support for industry and technological development. Therefore, an industrial policy is not an ideological but a pragmatic choice - one which developing countries have to take in order to achieve their own development process, co-ordinating it with other major policies such as macroeconomic, skills and technology policies, and using current instruments and institutions.
DURING THE EARLY 1960S a fierce debate raged in Japan about whether to continue supporting its automotive industry because Japan's first foray into ex-porting cars into the US market had proved spectacularly unsuccessful. Rather, Japanese free-trade economists argued, Japan should specialise in what it was best at - exporting silk - and abandon attempts to develop more advanced industries. If Japan had followed this advice it would not now be one of the richest countries in the world in per capita terms.The story of Japan's rapid industrialisation through industrial policy and that of other east Asian tigers is relatively well known. Although there have been numerous examples of industrial policy failures, what is less well known is that there are almost no historical examples of countries that have industrialised without an active industrial and trade policy.
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