Journal Article

Policies Facilitating Firm Adjustment to Globalization

Bernard Hoekman and Beata Smarzynska Javorcik

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 20, issue 3, pages 457-473
Published in print September 2004 | ISSN: 0266-903X
Published online September 2004 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grh027
Policies Facilitating Firm Adjustment to Globalization

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  • Economic Development and Growth
  • Public Economics
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This paper focuses on policies facilitating firm adjustment to globalization. We briefly review the effects of trade and investment liberalization on firms, focusing on within-industry effects. We postulate that governments' role in supporting the process is to: (i) ensure that firms face the 'right' incentives to adjust, and (ii) intervene in areas where market failures are present. The main message of the paper is that, while many policies could be adopted, they need to be carefully designed and implemented in a stable macroeconomic environment. An institutional infrastructure that supports the functioning of modern markets is most important. Pro-active support policies of whatever stripe should be subject to cost–benefit analysis, based on the existence of an identified market failure and monitored for performance and cost effectiveness. Transparency and accountability are critical in ensuring that interventions accomplish their intended objectives rather than being vehicles for rent seeking.

Journal Article.  0 words. 

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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