Kuznetsov, YevgenySabel, Charles2012-08-132012-08-132011-09https://hdl.handle.net/10986/11057This note starts from the premise that policy makers invariably make mistakes, both intentional and unintentional. That requires shifting the focus from one-time choice of winners (sectors, industries, firms, and other organizations) to the process of error detection and error correction of the choices (with corresponding attention to governance). This note shifts the debate on government activism in support of globally competitive industries from a choice of picking/dropping winners to a process of step-by-step transformation of private and public sectors. In such a process, new industrial policy creates its own context for efficient design and implementation in two ways. First, by shifting the focus of analysis and institutional design from private sector to a new public sector capable of providing customized and flexible public goods and enabling private agents to compete globally. The key concept here is heterogeneity (discretionary differences) of institutions: it is almost always possible to find some that are working. The issue is using the ones that work to improve those that don't. This hypothesis assumes that there are nearly always opportunities for development in a given economy, and that some actors, private and public, begin to take advantage of them.CC BY 3.0 IGOACCOUNTINGACTIVISMBANK POLICYBENCHMARKINGBIOTECHNOLOGYBUSINESS DEVELOPMENTBUSINESS PLANBUSINESSESBUYERSCALL CENTERSCAPABILITIESCAPABILITYCAPACITY BUILDINGCAPACITY-BUILDINGCHECKSCOLLABORATIONCOLLECTIVE ACTIONCOLLECTIVE ACTION PROBLEMCOMPETITIVENESSCORPORATE PROFITSCORRUPTDEBTDEVELOPING COUNTRIESDEVELOPMENT AGENCYDEVELOPMENT BANKDIRECTED CREDITDOMAINDOMAINSDOMESTIC BANKSECONOMIC ACTIVITIESECONOMIC ACTIVITYECONOMIC ORDERENDOGENOUS VARIABLESENGINEERSEQUIPMENTEXPORTSFINANCIAL MANAGEMENTFINANCIAL MARKETSFOREIGN DIRECT INVESTMENTGLOBAL SUPPLY CHAINSGOVERNMENT POLICIESINDUSTRIAL DEVELOPMENTINDUSTRIAL TECHNOLOGYINFORMATION TECHNOLOGYINITIATIVEINNOVATIONINSTITUTIONAL FRAMEWORKINSTRUMENTINTERNATIONAL INVESTMENTINVESTMENT CLIMATEKICKBACKSLEARNINGMARKET FAILURESMEDIUM ENTERPRISESMINISTERMINISTERSMULTINATIONALMULTINATIONALSNETWORKSOPEN ECONOMIESOPEN ECONOMYPOLITICAL ECONOMYPOLITICIANSPORTFOLIOPRIVATE SECTORPRIVATE SECTORSPROGRAMSPUBLIC FUNDSPUBLIC GOODPUBLIC MONEYPUBLIC OFFICIALSR&DREGULATORY AUTHORITIESREGULATORY ENVIRONMENTREGULATORY REFORMRELIABILITYREMEDYRENT SEEKINGRESULTRESULTSRETURNSSEARCHSEARCHESSEMICONDUCTORSILICONSTOCK EXCHANGESUPPLY CHAINSUPPLY NETWORKSTAXTAX EXEMPTIONSTAX INCENTIVESTECHNICAL ASSISTANCETECHNICAL ISSUESTECHNICAL KNOWLEDGETECHNICAL TRAININGTECHNICIANSTRAINING SYSTEMSTRANSPARENCYUSERSVALUE ADDEDVIRUSWEBWEB SITEWorld Bank10.1596/11057