Industrial Policies and Growth: Lessons from International Experience

In analyzing the impact of industrial policy, it is important to distinguish between the initiation of industrialization and its continuance once a higher level of growth was achieved. The recovery in Japan between 1945 and 1955 or 1960 was probably accelerated by government efforts to restore prewar levels of capacity and productivity in sectors such as mining, cotton spinning, and steel. In some ways this was the relatively easy part of postwar Japanese growth, as the knowledge base on which the prewar structure was based had not been destroyed. Capital accumulation, the direction of foreign exchange to acquire critical equipment and technology licenses, and investment coordination almost surely served a positive role, though it is hard to prove given lacunae in data for this period. Yet when one considers the Japanese or foreign image of Japan Inc. popular in the 1980s, the issue is not the contribution of industrial policy to the immediate postwar recovery, but the role of government in fostering the entry of firms into new (for Japan) sectors and whether such policies were the source of rapid growth in living standards in the period from 1960 to 1990.

  • Authors: Howard Noland and Howard Pack
  • Year: 2002
  • Organisation: Institute of International Economics
  • Publisher: Central Bank of Chile
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