Industrial Policy, Information, and Government Capacity
Governments are resource and bandwidth constrained, and hence need to prioritize productivity-enhancing policies. To do so requires information on the nature and magnitude of market failures on the one hand, and government’s capacity to redress the...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/345771494517558184/Industrial-policy-information-and-government-capacity http://hdl.handle.net/10986/26735 |
| Summary: | Governments are resource and bandwidth
constrained, and hence need to prioritize
productivity-enhancing policies. To do so requires
information on the nature and magnitude of market failures
on the one hand, and government’s capacity to redress them
successfully on the other. The paper reviews perspectives on
vertical (sectoral) and horizontal (factor markets, cluster)
policies with an eye to both criteria. It first argues that
the case for either cannot be made on the basis of the
likelihood of successful implementation: for instance,
educational and picking the winner types of policies both
run the risks of capture and incompetent execution. However,
the profession has been able to establish more convincing
market failures for horizontal policies than for vertical
policies. Most of the recent approaches to identifying
failures around particular goods, the paper argues, are of
limited help. Hence, for a given difficulty of execution,
the former are generally to be preferred. A second critical
message is that improving the quality of governance in terms
of collecting information, coordination ability, and
defending against capture is critical to successful
implementation of productivity policies and should be
central on the policy agenda. |
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