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

Erik Berglof and Vince Cable ()
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Vince Cable: London School of Economics

No 537, ADB Economics Working Paper Series from Asian Development Bank

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.

Keywords: emerging economies; industrial policy; innovation; state capacity; structural transformation (search for similar items in EconPapers)
JEL-codes: F43 L52 O31 O38 O43 O47 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2018-02-20
New Economics Papers: this item is included in nep-ino and nep-war
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0537

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