Industrial Policy for the Twenty-First Century

The discussion on this paper is based on the development of a framework for conducting industrial policy that minimizes the risk that it will generate waste and rent-seeking whilst maximizing its potential to contribute to economic growth. The paper argues that industrial policy needs to be viewed differently from the conventional approach which consists of enumerating technological and other externalities and then targeting policy interventions on market failures. The focus of the discussion is on the administrative and fiscal feasibility of the policy interventions, their informational requirements and their political consequences. The main argument is that the task of industrial policy is as much about eliciting information from the private sector on significant externalities and their remedies as it is about implementing appropriate policies. The correct model for industrial policy is a strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuring lie and what type of interventions are most likely to eliminate them.

  • Authors: Dani Rodrik
  • Year: 2004
  • Organisation: UNIDO
  • Publisher: n/a
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