Industrial Policy on the Rise

Comments byLaurids S. LauridsenRoskilde University

Normalizing industrial policy? (1)

• “The necessary transition to a more sustainable, inclusive and resource-efficient economy will have to be supported by both horizontal and sectoral policies at all levels and will require strengthened European governance and social dialogue” [EC COM(2010)614, 4]

• ”The present round of industrial policy will no doubt produce some modest successes – and a crop of whopping failures” (The Economist August 7th 2010, 56)

Normalizing industrial policy? (2)

• “Encouraging broad-based and inclusive growth does not imply a return to government-sponsored industrial policies, but instead puts the emphasis on policies that remove constraints to growth and create a level playing field for investment” (The World Bank, “What is Inclusive Growth, 2009, 1)

The core argument• The mainstream

development discourse• Trade liberalisation (DDA) and

FDI• Comparative advantage

following approach • Good Governance• Soft individualised issues -

– Property rights (de Soto)– MDG – Micro-credit (Yunus)

• A new (old) development discourse

• Bring production back in• PONEs, domestic savings and

collective efforts • Strategic industrial policy –

market-defying interventions• Developmental state (balanced

SBRs)• Add-on issues:

– Inclusionary growth– human dev., low-carbon and

technological capabilities– ideas, politics

Issues for discussion

• A difference?: Wade on ”self-discovery” and ”followership” versus Chang on market-defying interventions

• SBRs – any room for integrating “a labour point of view”?• Feasibility?

– What are the lessons for countries with low state capacity?– What the role of “the politics” of industrial policy making?

• Changing global conditions– Global production networks/global value chains– The organisational decomposition of the innovation process– The shrinking policy space (WTO and bilateral trade/investment

agreements)• Does China make a difference – Africa? The post-2000

experience?

SBR relations – centralised versus decentralised

• Start-up versus Catch-up industrialisation• Diversification, Deepening and Upgrading• Market failure, state failure and network failure