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Back in Business: Industrial Policy for Emerging Economies in the New Globalization

Author

Listed:
  • Berglof, Erik

    (London School of Economics)

  • Cable , Vince

    (London School of Economics)

Abstract
We explore the potential roles of industrial policy in the transition from middle-income to high-income status, and the actual experience of industrial policy in emerging economies. Guided by the conceptual framework of the neo-Schumpeterian approach, we look at industrial policy in the context of structural transformation, i.e., in transforming economic structures as well as the institutions supporting these structures. Today’s emerging economies face a dual structural transformation challenge: (i) to move closer to the current world technology frontier (traditional catch-up), and (ii) to adjust to technological change in advanced economies and increasingly binding environmental and social constraints. The feasible set of industrial policy is constrained by state capacity. The paradox of industrial policy is that it is most straightforward when state capacity is the most constrained. We suggest that emerging economies still should explore what we denote as sector-based horizontal policies addressing market and state failures in individual industries.

Suggested Citation

  • Berglof, Erik & Cable , Vince, 2018. "Back in Business: Industrial Policy for Emerging Economies in the New Globalization," ADB Economics Working Paper Series 537, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0537
    as

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    File URL: https://www.adb.org/publications/industrial-policy-emerging-economies
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    References listed on IDEAS

    as
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    Cited by:

    1. Grashof, Nils, 2020. "Putting the watering can away Towards a targeted (problem-oriented) cluster policy framework," Papers in Innovation Studies 2020/4, Lund University, CIRCLE - Centre for Innovation Research.
    2. Grashof, Nils, 2021. "Putting the watering can away –Towards a targeted (problem-oriented) cluster policy framework," Research Policy, Elsevier, vol. 50(9).
    3. Ge, Guoqing & Xue, Jian & Zhang, Qian, 2024. "Industrial policy and governmental venture capital: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    emerging economies; industrial policy; innovation; state capacity; structural transformation;
    All these keywords.

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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