The Rejuvenation of Industrial Policy

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 w...

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Main Authors:	Stiglitz, Joseph E., Lin, Justin Yifu, Monga, Célestin
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ADVERSE EFFECTS AGRICULTURE ALLOCATION ALLOWANCES ASYMMETRIC INFORMATION BANKRUPTCY BANKS BENCHMARKING BEST PRACTICES CAPITAL INVESTMENTS CLIMATE CLIMATE CHANGE COMPARATIVE ADVANTAGE COMPETITIVENESS CONSUMERS COUNTRY CASE DEBT DEREGULATION DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT GOALS DEVELOPMENT POLICY DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY ECONOMIC DEVELOPMENT ECONOMIC DIVERSIFICATION ECONOMIC EFFICIENCY ECONOMIC FUNCTIONS ECONOMIC GROWTH ECONOMIC IMPLICATIONS ECONOMIC POLICY ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC STUDIES ECONOMIC THEORY ECONOMIC WELFARE EXCHANGE RATE EXCHANGE RATE POLICY EXPORTS EXTERNALITIES FEDERAL GOVERNMENT FINANCIAL AID FINANCIAL BURDEN FINANCIAL CRISIS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE MARKETS GLOBAL ECONOMY GOOD GOVERNANCE GROWTH RATES HIGH GROWTH IMPORT SUBSTITUTION INCOME INCOME LEVELS INDUSTRIAL DEVELOPMENT INDUSTRIAL POLICY INDUSTRIALIZATION INFANT INDUSTRY ARGUMENT INTEREST RATE INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL TRADE JOBS LAWS LEARNING LEGAL FRAMEWORK LEGAL FRAMEWORKS LOW-INCOME COUNTRIES MACROECONOMIC POLICIES MARGINAL COST MARKET ECONOMY MARKET FAILURE MARKET FAILURES MINISTER MONOPOLY OPPORTUNITY COST PER CAPITA INCOME POLICY PERSPECTIVE POLICY RESEARCH POLITICAL ECONOMY POLITICAL LEADERS PREFERENTIAL PREFERENTIAL ACCESS PRIVATIZATION PROCUREMENT PRODUCTION FUNCTION PUBLIC GOOD PUBLIC POLICIES PUBLIC POLICY RESOURCE ALLOCATION SCIENTISTS SMALL BUSINESS STATE ENTERPRISES STRUCTURAL CHANGE SUBSTITUTION TAX CODES TAX EXPENDITURES TECHNOLOGICAL INNOVATION TECHNOLOGICAL PROGRESS TECHNOLOGY TRANSFER TRADE POLICY TREASURY BILLS UNDERVALUED EXCHANGE RATE WAGES WORLD TRADE ORGANIZATION
Online Access:	http://documents.worldbank.org/curated/en/2013/09/18324250/rejuvenation-industrial-policy http://hdl.handle.net/10986/16845

id	okr-10986-16845
recordtype	oai_dc
spelling	okr-10986-168452021-04-23T14:03:32Z The Rejuvenation of Industrial Policy Stiglitz, Joseph E. Lin, Justin Yifu Monga, Célestin ADVERSE EFFECTS AGRICULTURE ALLOCATION ALLOWANCES ASYMMETRIC INFORMATION BANKRUPTCY BANKS BENCHMARKING BEST PRACTICES CAPITAL INVESTMENTS CLIMATE CLIMATE CHANGE COMPARATIVE ADVANTAGE COMPETITIVENESS CONSUMERS COUNTRY CASE DEBT DEREGULATION DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT GOALS DEVELOPMENT POLICY DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY ECONOMIC DEVELOPMENT ECONOMIC DIVERSIFICATION ECONOMIC EFFICIENCY ECONOMIC FUNCTIONS ECONOMIC GROWTH ECONOMIC IMPLICATIONS ECONOMIC POLICY ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC STUDIES ECONOMIC THEORY ECONOMIC WELFARE EXCHANGE RATE EXCHANGE RATE POLICY EXPORTS EXTERNALITIES FEDERAL GOVERNMENT FINANCIAL AID FINANCIAL BURDEN FINANCIAL CRISIS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE MARKETS GLOBAL ECONOMY GOOD GOVERNANCE GROWTH RATES HIGH GROWTH IMPORT SUBSTITUTION INCOME INCOME LEVELS INDUSTRIAL DEVELOPMENT INDUSTRIAL POLICY INDUSTRIALIZATION INFANT INDUSTRY ARGUMENT INTEREST RATE INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL TRADE JOBS LAWS LEARNING LEGAL FRAMEWORK LEGAL FRAMEWORKS LOW-INCOME COUNTRIES MACROECONOMIC POLICIES MARGINAL COST MARKET ECONOMY MARKET FAILURE MARKET FAILURES MINISTER MONOPOLY OPPORTUNITY COST PER CAPITA INCOME POLICY PERSPECTIVE POLICY RESEARCH POLITICAL ECONOMY POLITICAL LEADERS PREFERENTIAL PREFERENTIAL ACCESS PRIVATIZATION PROCUREMENT PRODUCTION FUNCTION PUBLIC GOOD PUBLIC POLICIES PUBLIC POLICY RESOURCE ALLOCATION SCIENTISTS SMALL BUSINESS STATE ENTERPRISES STRUCTURAL CHANGE SUBSTITUTION TAX CODES TAX EXPENDITURES TECHNOLOGICAL INNOVATION TECHNOLOGICAL PROGRESS TECHNOLOGY TRANSFER TRADE POLICY TREASURY BILLS UNDERVALUED EXCHANGE RATE WAGES WORLD TRADE ORGANIZATION 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. 2014-02-03T21:45:28Z 2014-02-03T21:45:28Z 2013-09 http://documents.worldbank.org/curated/en/2013/09/18324250/rejuvenation-industrial-policy http://hdl.handle.net/10986/16845 English en_US Policy Research Working Paper;No. 6628 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADVERSE EFFECTS AGRICULTURE ALLOCATION ALLOWANCES ASYMMETRIC INFORMATION BANKRUPTCY BANKS BENCHMARKING BEST PRACTICES CAPITAL INVESTMENTS CLIMATE CLIMATE CHANGE COMPARATIVE ADVANTAGE COMPETITIVENESS CONSUMERS COUNTRY CASE DEBT DEREGULATION DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT GOALS DEVELOPMENT POLICY DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY ECONOMIC DEVELOPMENT ECONOMIC DIVERSIFICATION ECONOMIC EFFICIENCY ECONOMIC FUNCTIONS ECONOMIC GROWTH ECONOMIC IMPLICATIONS ECONOMIC POLICY ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC STUDIES ECONOMIC THEORY ECONOMIC WELFARE EXCHANGE RATE EXCHANGE RATE POLICY EXPORTS EXTERNALITIES FEDERAL GOVERNMENT FINANCIAL AID FINANCIAL BURDEN FINANCIAL CRISIS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE MARKETS GLOBAL ECONOMY GOOD GOVERNANCE GROWTH RATES HIGH GROWTH IMPORT SUBSTITUTION INCOME INCOME LEVELS INDUSTRIAL DEVELOPMENT INDUSTRIAL POLICY INDUSTRIALIZATION INFANT INDUSTRY ARGUMENT INTEREST RATE INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL TRADE JOBS LAWS LEARNING LEGAL FRAMEWORK LEGAL FRAMEWORKS LOW-INCOME COUNTRIES MACROECONOMIC POLICIES MARGINAL COST MARKET ECONOMY MARKET FAILURE MARKET FAILURES MINISTER MONOPOLY OPPORTUNITY COST PER CAPITA INCOME POLICY PERSPECTIVE POLICY RESEARCH POLITICAL ECONOMY POLITICAL LEADERS PREFERENTIAL PREFERENTIAL ACCESS PRIVATIZATION PROCUREMENT PRODUCTION FUNCTION PUBLIC GOOD PUBLIC POLICIES PUBLIC POLICY RESOURCE ALLOCATION SCIENTISTS SMALL BUSINESS STATE ENTERPRISES STRUCTURAL CHANGE SUBSTITUTION TAX CODES TAX EXPENDITURES TECHNOLOGICAL INNOVATION TECHNOLOGICAL PROGRESS TECHNOLOGY TRANSFER TRADE POLICY TREASURY BILLS UNDERVALUED EXCHANGE RATE WAGES WORLD TRADE ORGANIZATION
spellingShingle	ADVERSE EFFECTS AGRICULTURE ALLOCATION ALLOWANCES ASYMMETRIC INFORMATION BANKRUPTCY BANKS BENCHMARKING BEST PRACTICES CAPITAL INVESTMENTS CLIMATE CLIMATE CHANGE COMPARATIVE ADVANTAGE COMPETITIVENESS CONSUMERS COUNTRY CASE DEBT DEREGULATION DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT GOALS DEVELOPMENT POLICY DEVELOPMENT STRATEGIES DEVELOPMENT STRATEGY ECONOMIC DEVELOPMENT ECONOMIC DIVERSIFICATION ECONOMIC EFFICIENCY ECONOMIC FUNCTIONS ECONOMIC GROWTH ECONOMIC IMPLICATIONS ECONOMIC POLICY ECONOMIC RESEARCH ECONOMIC STRUCTURE ECONOMIC STUDIES ECONOMIC THEORY ECONOMIC WELFARE EXCHANGE RATE EXCHANGE RATE POLICY EXPORTS EXTERNALITIES FEDERAL GOVERNMENT FINANCIAL AID FINANCIAL BURDEN FINANCIAL CRISIS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FREE MARKETS GLOBAL ECONOMY GOOD GOVERNANCE GROWTH RATES HIGH GROWTH IMPORT SUBSTITUTION INCOME INCOME LEVELS INDUSTRIAL DEVELOPMENT INDUSTRIAL POLICY INDUSTRIALIZATION INFANT INDUSTRY ARGUMENT INTEREST RATE INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL TRADE JOBS LAWS LEARNING LEGAL FRAMEWORK LEGAL FRAMEWORKS LOW-INCOME COUNTRIES MACROECONOMIC POLICIES MARGINAL COST MARKET ECONOMY MARKET FAILURE MARKET FAILURES MINISTER MONOPOLY OPPORTUNITY COST PER CAPITA INCOME POLICY PERSPECTIVE POLICY RESEARCH POLITICAL ECONOMY POLITICAL LEADERS PREFERENTIAL PREFERENTIAL ACCESS PRIVATIZATION PROCUREMENT PRODUCTION FUNCTION PUBLIC GOOD PUBLIC POLICIES PUBLIC POLICY RESOURCE ALLOCATION SCIENTISTS SMALL BUSINESS STATE ENTERPRISES STRUCTURAL CHANGE SUBSTITUTION TAX CODES TAX EXPENDITURES TECHNOLOGICAL INNOVATION TECHNOLOGICAL PROGRESS TECHNOLOGY TRANSFER TRADE POLICY TREASURY BILLS UNDERVALUED EXCHANGE RATE WAGES WORLD TRADE ORGANIZATION Stiglitz, Joseph E. Lin, Justin Yifu Monga, Célestin The Rejuvenation of Industrial Policy
relation	Policy Research Working Paper;No. 6628
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Stiglitz, Joseph E. Lin, Justin Yifu Monga, Célestin
author_facet	Stiglitz, Joseph E. Lin, Justin Yifu Monga, Célestin
author_sort	Stiglitz, Joseph E.
title	The Rejuvenation of Industrial Policy
title_short	The Rejuvenation of Industrial Policy
title_full	The Rejuvenation of Industrial Policy
title_fullStr	The Rejuvenation of Industrial Policy
title_full_unstemmed	The Rejuvenation of Industrial Policy
title_sort	rejuvenation of industrial policy
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2013/09/18324250/rejuvenation-industrial-policy http://hdl.handle.net/10986/16845
_version_	1764434676576944128

The Rejuvenation of Industrial Policy

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