Making Industrial Policy Work
Industrial policy is back – or rather, back in fashion, as it never really went away, even in countries proclaiming adherence to free-market principles. But, for developing countries, the old dangers of IP continue to apply – and new challenges abound.
GENEVA – Industrial policy (IP) is back – or rather, back in fashion. Of course, it never really went away, even in countries formally adhering to free-market principles. But the post-crisis world – in which government intervention in the economy has gained greater legitimacy – will see more of it. Likewise, China’s success, and the temptation to bandwagon on its development model, has reinvigorated IP’s appeal, as have better policy tools and greater experience of what works and what doesn’t – a point well argued by Justin Lin of the World Bank.
GENEVA – Industrial policy (IP) is back – or rather, back in fashion. Of course, it never really went away, even in countries formally adhering to free-market principles. But the post-crisis world – in which government intervention in the economy has gained greater legitimacy – will see more of it. Likewise, China’s success, and the temptation to bandwagon on its development model, has reinvigorated IP’s appeal, as have better policy tools and greater experience of what works and what doesn’t – a point well argued by Justin Lin of the World Bank.