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"INDUSTRIAL POLICY"
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Embedded autonomy
In recent years, debate on the state's economic role has too often devolved into diatribes against intervention. Peter Evans questions such simplistic views, offering a new vision of why state involvement works in some cases and produces disasters in others. To illustrate, he looks at how state agencies, local entrepreneurs, and transnational corporations shaped the emergence of computer industries in Brazil, India, and Korea during the seventies and eighties.
Evans starts with the idea that states vary in the way they are organized and tied to society. In some nations, like Zaire, the state is predatory, ruthlessly extracting and providing nothing of value in return. In others, like Korea, it is developmental, promoting industrial transformation. In still others, like Brazil and India, it is in between, sometimes helping, sometimes hindering. Evans's years of comparative research on the successes and failures of state involvement in the process of industrialization have here been crafted into a persuasive and entertaining work, which demonstrates that successful state action requires an understanding of its own limits, a realistic relationship to the global economy, and the combination of coherent internal organization and close links to society that Evans called \"embedded autonomy.\"
eBook
A New Approach for Better Industrial Strategies
Industrial policy is back. After having been considered a taboo since the 1970s, “new industrial policies” are at the core of governments’ strategies to support countries during crises and enable the green and digital transitions. Virtually, every government has used and uses industrial policy, despite continued concerns related to anticompetitive effects, within and across countries, captured by vested interests and the opportunity cost of public funds, which economists have pointed out, based on previous unsuccessful experiences. In this paper, we contribute to the debate on industrial policy by presenting both a sound and simple framework to help design industrial policies and also data that allow the comparison of industrial strategies and their priorities across countries. First, this paper summarises our recent framework for industrial strategies, which is designed to offer practical policy advice and shed light on the complementarities between different policy instruments. Such a framework is particularly useful when designing complex mission-oriented industrial strategies promoting the green transition of the business sector. Second, this paper presents some salient results from the new “Quantifying Industrial Strategies” (QuIS) project, which gathers harmonised data on industrial policy expenditures, policy priorities, and policy instruments, thereby allowing the benchmarking of industrial strategies across countries. Based on the aforementioned conceptual framework, QuIS measures industrial policy expenditures across 9 OECD members, for the period 2019–2021. The data, now publicly available on the OECD website, show the importance of industrial policy expenditures, and the growing role of green industrial policies in countries industrial strategies.
Journal Article
INDUSTRIAL POLICIES IN PRODUCTION NETWORKS
Many developing economies adopt industrial policies favoring selected sectors. Is there an economic logic to this type of intervention? I analyze industrial policy when economic sectors form a production network via input-output linkages. Market imperfections generate distortionary effects that compound through backward demand linkages, causing upstream sectors to become the sink for imperfections and have the greatest size distortions. My key finding is that the distortion in sectoral size is a sufficient statistic for the social value of promoting that sector; thus, there is an incentive for a well-meaning government to subsidize upstream sectors. Furthermore, sectoral interventions’ aggregate effects can be simply summarized, to first order, by the cross-sector covariance between my sufficient statistic and subsidy spending. My sufficient statistic predicts sectoral policies in South Korea in the 1970s and modern-day China, suggesting that sectoral interventions might have generated positive aggregate effects in these economies.
Journal Article
Locked in place
Why were some countries able to build \"developmental states\" in the decades after World War II while others were not? Through a richly detailed examination of India's experience,Locked in Placeargues that the critical factor was the reaction of domestic capitalists to the state-building project. During the 1950s and 1960s, India launched an extremely ambitious and highly regarded program of state-led development. But it soon became clear that the Indian state lacked the institutional capacity to carry out rapid industrialization. Drawing on newly available archival sources, Vivek Chibber mounts a forceful challenge to conventional arguments by showing that the insufficient state capacity stemmed mainly from Indian industrialists' massive campaign, in the years after Independence, against a strong developmental state.
Chibber contrasts India's experience with the success of a similar program of state-building in South Korea, where political elites managed to harness domestic capitalists to their agenda. He then develops a theory of the structural conditions that can account for the different reactions of Indian and Korean capitalists as rational responses to the distinct development models adopted in each country.
Provocative and marked by clarity of prose, this book is also the first historical study of India's post-colonial industrial strategy. Emphasizing the central role of capital in the state-building process, and restoring class analysis to the core of the political economy of development,Locked in Placeis an innovative work of theoretical power that will interest development specialists, political scientists, and historians of the subcontinent.
eBook
Site Fights
One of the most vexing problems for governments is building controversial facilities that serve the needs of all citizens but have adverse consequences for host communities. Policymakers must decide not only where to locate often unwanted projects but also what methods to use when interacting with opposition groups. InSite Fights, Daniel P. Aldrich gathers quantitative evidence from close to five hundred municipalities across Japan to show that planners deliberately seek out acquiescent and unorganized communities for such facilities in order to minimize conflict.
When protests arise over nuclear power plants, dams, and airports, agencies regularly rely on the coercive powers of the modern state, such as land expropriation and police repression. Only under pressure from civil society do policymakers move toward financial incentives and public relations campaigns. Through fieldwork and interviews with bureaucrats and activists, Aldrich illustrates these dynamics with case studies from Japan, France, and the United States. The incidents highlighted inSite Fightsstress the importance of developing engaged civil society even in the absence of crisis, thereby making communities both less attractive to planners of controversial projects and more effective at resisting future threats.
eBook