Normalizing Industrial Policy

By Dani Rodrik. 2008

325 citations recorded by the source corpus.

The theoretical case for industrial policy is a strong one. The market failures that industrial policies target in markets for credit, labor, products, and knowledge have long been at the core of what development economists study. The conventional case against industrial policy rests on practical difficulties with its implementation. Even though the issues could in principle be settled by empirical evidence, the evidence to date remains uninformative. Moreover, the conceptual difficulties involved in statistical inference in this area are so great that it is hard to see how statistical evidence could ever yield a convincing verdict. A review of industrial policy in three non-Asian settings El Salvador, Uruguay, and South Africa highlights the extensive amount of industrial policy that is already being carried out and frames the need for industrial policy in the specific circumstances of individual countries. The traditional informational and bureaucratic constraints on the exercise of industrial policy are not givens; they can be molded and rendered less binding through appropriate institutional design. Three key design attributes that industrial policy must possess are embeddedness, carrots-and-sticks, and accountability.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/a0eb98eb4005ad594e952674aa101c2db788edd4

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Citations in the corpus

Growth Theory and "Green Growth" (2014, background): “Some observers point to a broader category of economy-wide “coordination problems” as hindering growth (Rodrik 2008).”
The future of economic convergence (2011, background): “When China eventually joined the WTO, the country did not stop promoting its industries, but shifted from trade and direct industrial policies (now banned by international rules) to currency undervaluation (Rodrik 2008a, 2010a).”
Industrial Policy: Don’t Ask Why, Ask How (2009, unknown): “See Rodrik (2008) for a detailed analysis of this and other complications.”
State and Development: The Need for a Reappraisal of the Current Literature† (2016, background): “46 Rodrik (2008) discusses the difficulties involved in statistical inference on this topic, particularly when policy adoptions are endogenous.”
Making Room for China in the World Economy (2010, methodology): “I discuss two broad categories in Rodrik (2008b).”