Journal Article

Is There a Case for Industrial Policy? A Critical Survey

Howard Pack and Kamal Saggi

in The World Bank Research Observer

Published on behalf of World Bank

Volume 21, issue 2, pages 267-297
Published in print January 2006 | ISSN: 0257-3032
Published online July 2006 | e-ISSN: 1564-6971 | DOI:
Is There a Case for Industrial Policy? A Critical Survey

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What are the underlying rationales for industrial policy? Does empirical evidence support the use of industrial policy for correcting market failures that plague the process of industrialization? This article addresses these questions through a critical survey of the analytical literature on industrial policy. It also reviews some recent industry successes and argues that public interventions have played only a limited role. Moreover, the recent ascendance and dominance of international production networks in the sectors in which developing countries once had considerable success implies a further limitation on the potential role of industrial policies as traditionally understood. Overall, there appears to be little empirical support for an activist government policy even though market failures exist that can, in principle, justify the use of industrial policy.

Journal Article.  14095 words. 

Subjects: Development Planning and Policy

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