New Open Economy Industrial Policy : Making Choices without Picking Winners
This 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...
| Main Authors: | , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2011/09/16359423/new-open-economy-industrial-policy-making-choices-without-picking-winners http://hdl.handle.net/10986/11057 |
| Summary: | This 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. |
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