Is There a Case for Industrial Policy? A Critical Survey

Posted: 29 Feb 2008

See all articles by Howard Pack

Howard Pack

University of Pennsylvania - Management Department; University of Pennsylvania - Business & Public Policy Department

Date Written: 2006

Abstract

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.

Suggested Citation

Pack, Howard, Is There a Case for Industrial Policy? A Critical Survey ( 2006). The World Bank Research Observer, Vol. 21, Issue 2, pp. 267-297, 2006, Available at SSRN: https://ssrn.com/abstract=1096007 or http://dx.doi.org/10.1093/wbro/lkl001

Howard Pack (Contact Author)

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

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