Industrial Policy in the African Context

32 Pages Posted: 20 Apr 2016

See all articles by Joseph E. Stiglitz

Joseph E. Stiglitz

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Justin Y. Lin

Peking University - China Center for Economic Research

Celestin Monga

World Bank - Research Department

Ebrahim Patel

Government of the Republic of South Africa

Date Written: October 1, 2013

Abstract

After long suffering from benign neglect if not outright contempt, industrial policy is almost fashionable again. The global financial and economic crisis known as the Great Recession has forced researchers and policy makers to confront the reality that market forces alone generally do not lead to (constrained) Pareto-efficient outcomes. Many important national and global policy objectives (equality of opportunity for all citizens, financial stability and inclusion, environmental protection and pollution control, etc.) are simply often not reflected in market prices and not achieved by markets on their own. In addition to traditional justification for industrial policies -- dealing with externalities and coordination issues?economists and policy makers now acknowledge the need to foster learning at the level of each economic agent and throughout society and the ultimate responsibility that the state must bear in that crucial process. But converting the now widely accepted theoretical principles of industrial policy into practical frameworks for concrete government action is indeed a daunting task everywhere and perhaps more so in the African context where the institutional underpinnings of effective government are often not as strong as one might have hoped. This essay highlights the intellectual foundations and broad principles of good industrial policy, outlines the contours of the policy agenda, and fleshes out the lessons learned. It argues that there has been substantial progress on the understanding and acceptance of industrial policy and that Africa could benefit enormously from it and from the unprecedented new opportunities brought to light by a multipolar world.

Keywords: Environmental Economics & Policies, Population Policies, Climate Change Economics, Economic Theory & Research, Public Sector Corruption & Anticorruption Measures

Suggested Citation

Stiglitz, Joseph E. and Lin, Justin Yifu and Monga, Célestin and Patel, Ebrahim, Industrial Policy in the African Context (October 1, 2013). World Bank Policy Research Working Paper No. 6633. Available at SSRN: https://ssrn.com/abstract=2335144

Joseph E. Stiglitz (Contact Author)

Columbia Business School - Finance and Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Justin Yifu Lin

Peking University - China Center for Economic Research ( email )

No. 38 Xueyuan Road
Haidian District
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China

Célestin Monga

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Ebrahim Patel

Government of the Republic of South Africa ( email )

South Africa

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