On the Importance of Openess for Industrial Policy Design in Developing Countries

SERIES Working Paper No. 14

Posted: 25 May 2011

See all articles by Kjetil Bjorvatn

Kjetil Bjorvatn

Norwegian School of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute)

Nicola D. Coniglio

Università degli Studi di Bari “Aldo Moro” (UNIBA) - Department of Economics and Mathematical Methods

Date Written: January 23, 2007

Abstract

How should industrial policy be designed in developing countries? Should industrial policy be targeted to a few sectors or be more broad based and therefore more neutral? Our theoretical analysis demonstrates that access to foreign markets is key to answering this question. We show that in a less open economy, industrial policy should be targeted, while in a more open economy, broad based policies are likely to be more effective. One implication of this result is that deregulation is likely to be more successful in a relatively open economy than in a more closed economy. Indeed, deregulation with limited foreign market access may lead to industrialization. We provide empirical results that support these predictions.

Keywords: Industrialization, policy design, policy reform, economic growth, openess

JEL Classification: F15, O14, O20

Suggested Citation

Bjorvatn, Kjetil and Coniglio, Nicola D., On the Importance of Openess for Industrial Policy Design in Developing Countries (January 23, 2007). SERIES Working Paper No. 14, Available at SSRN: https://ssrn.com/abstract=1852104

Kjetil Bjorvatn

Norwegian School of Economics and Business Administration ( email )

Helleveien 30
N-5035 Bergen
Norway
47-55 9595 85 (Phone)
47-55 9595 43 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Nicola D. Coniglio (Contact Author)

Università degli Studi di Bari “Aldo Moro” (UNIBA) - Department of Economics and Mathematical Methods ( email )

Largo Abbey St. Scholastica
Bari, 70124
Italy

HOME PAGE: http://www.dse.uniba.it/Corsi/docenti/Coniglio/Nicola_paginaWeb.htm

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