Is There a Case for Industrial Policy? A Critical Survey

Pack, Howard; Saggi, Kamal

doi:10.1093/wbro/lkl001

Publication: Is There a Case for Industrial Policy? A Critical Survey

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Date

2006-07-22

Published

2006-07-22

Author(s)

Pack, Howard

Saggi, Kamal

Abstract

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? This article addresses these questions through a critical survey of the analytical literature on industrial policy. It also reviews some recent industry successes and argues that public interventions have played only a limited role. Moreover, the recent ascendance and dominance of international production networks in the sectors in which developing countries once 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.

Citation

“Pack, Howard; Saggi, Kamal. 2006. Is There a Case for Industrial Policy? A Critical Survey. World Bank Research Observer. © Oxford University Press on behalf of the World Bank. http://hdl.handle.net/10986/16393 License: CC BY-NC-ND 3.0 IGO.”