Balancing Industrial Concentration and Competition for Economic Development in Asia

Asian Institute of Management (AIM) Working Paper No. 12-008

61 Pages Posted: 31 Aug 2012  

Ronald U. Mendoza

Ateneo De Manila University - Ateneo School of Government

Padmini Mahurkar

affiliation not provided to SSRN

Lai-Lynn Angelica B. Barcenas

affiliation not provided to SSRN

Date Written: August 30, 2012

Abstract

In pursuit of economic growth and development, countries have tried to strike a balance between competition and industrial policies across time. This paper will review the empirical evidence on industrial concentration and its economic correlates (notably firms’ performance as measured by profitability, factor productivity and innovation). It will also analyze how the introduction of competition policies and laws in South Korea, China, India, Indonesia and the Philippines affected industrial concentration. It will examine at what point in their industrialization and economic development these economies implemented these laws and policies. The empirical literature suggests that industrial concentration could exhibit an inverted-U-shaped relationship as far as its link to certain economic indicators of success, such as productivity and innovation. This suggests a role for recalibrating policies to adjust the balance between industrial concentration and competition, so that the over-all outcomes are net welfare enhancing. Indeed, country policy experiences reviewed here appear to demonstrate this recalibration, notably following privatization and liberalization policies.

Keywords: industrial policy, competition, import substitution, concentration, productivity

JEL Classification: E65, L11, O14, O25, P51

Suggested Citation

Mendoza, Ronald U. and Mahurkar, Padmini and Barcenas, Lai-Lynn Angelica B., Balancing Industrial Concentration and Competition for Economic Development in Asia (August 30, 2012). Asian Institute of Management (AIM) Working Paper No. 12-008. Available at SSRN: https://ssrn.com/abstract=2138724 or http://dx.doi.org/10.2139/ssrn.2138724

Ronald U. Mendoza (Contact Author)

Ateneo De Manila University - Ateneo School of Government ( email )

Katipunan Road
Loyola Heights
Quezon City, 1108
Philippines

Padmini Mahurkar

affiliation not provided to SSRN

Lai-Lynn Angelica B. Barcenas

affiliation not provided to SSRN ( email )

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