Publication: The Rejuvenation of Industrial Policy
Date
2013-09
ISSN
Published
2013-09
Author(s)
Abstract
This essay is about an important area in
which there has been major rethinking -- industrial policy,
by which the authors mean government policies directed at
affecting the economic structure of the economy. The
standard argument was that markets were efficient, so there
was no need for government to intervene either in the
allocation of resources across sectors or in the choices of
technique. And even if markets were not efficient,
governments were not likely to improve matters. But the
2008-2009 global financial crisis showed that markets were
not necessarily efficient and, indeed, there was a broad
consensus that without strong government intervention --
which included providing lifelines to certain firms and
certain industries -- the market economies of the United
States and Europe may have collapsed. Today, the relevance
and pertinence of industrial policies are acknowledged by
mainstream economists and political leaders from all sides
of the ideological spectrum. But what exactly is industrial
policy? Why has it raised so much controversy and confusion?
What is the compelling new rationale that seems to bring
mainstream economists to acknowledge the crucial importance
of industrial policy and revisit some of the fundamental
assumptions of economic theory and economic development? How
can industrial policy be designed to avoid the pitfalls of
some of the seeming past failures and to emulate some of the
past successes? What are the contours of the emerging
consensus and remaining issues and open questions? The paper
addresses these questions.
Link to Data Set
Citation
“Stiglitz, Joseph E.; Lin, Justin Yifu; Monga, Célestin. 2013. The Rejuvenation of Industrial Policy. Policy Research Working Paper;No. 6628. © World Bank, Washington, DC. http://hdl.handle.net/10986/16845 License: CC BY 3.0 IGO.”
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