The Political Economy of Industrial Policy in the Middle East and North Africa
In this paper, authors examine the political economy and consequences of industrial policy in the MENA region. How can the features of MENA’s industrial policy be explained? And what accounts for the fact that, against world trends, industrial poli...
| 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/745501503559844813/The-political-economy-of-industrial-policy-in-the-Middle-East-and-North-Africa http://hdl.handle.net/10986/28426 |
| Summary: | In this paper, authors examine the
political economy and consequences of industrial policy in
the MENA region. How can the features of MENA’s industrial
policy be explained? And what accounts for the fact that,
against world trends, industrial policies in MENA countries
didn’t followed the evolutionary path of industrial policies
of other countries? Unlike in many other regions, industrial
policy in MENA developed within the context of the region’s
strong ‘social contract’ between the government and its
people. Although industrial development was an objective, it
at times took a backseat to the more important goals of
social transformation and economic redistribution, which
influenced not only the types and success of industrial
policies adopted, but also critically influenced the balance
of power among interest groups. Section two of the paper
provides the theoretical framework for understanding the
experience with industrial policy. Starting with a brief
survey of the arguments used to justify industrial policy
interventions, and drawing on various strands of the
literature it provides a review of the various mechanisms
and arguments which help understand the factors which
determine the emergence and type of industrial policies
observed and how they change. Using this framework section
three reviews the experience of MENA countries during the
1950s to the 1970s and the emergence of state-dominated
vertical industrial policy, where traditional/sector
selective and sector specific policies have been used
extensively. Section four attempts to explain the failure
for industrial policy to change during the 1980s and 1990s.
While the developing world has moved toward more market
oriented policies and production systems that are dominated
by the private sector and rely on market signals, MENA has
maintained much of the old style industrial policies and
high state intervention in the economy that characterized
much of the developing world in the past. The final section
five makes concluding remarks on the likely directions of
industrial policy in the region. As internal and external
forces shape the way industrial policies can be used in the
globalized economy, the MENA region’s old style of
industrial policy will need to adjust. The ultimate path of
change will be determined greatly by each country’s initial
conditions and individual political economy factors. |
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