The Return of the Policy that Shall Not Be Named: Principles of Industrial Policy

80 Pages Posted: 25 Apr 2019

See all articles by Reda Cherif

Reda Cherif

International Monetary Fund (IMF)

Fuad Hasanov

International Monetary Fund

Date Written: March 2019

Abstract

Industrial policy is tainted with bad reputation among policymakers and academics and is often viewed as the road to perdition for developing economies. Yet the success of the Asian Miracles with industrial policy stands as an uncomfortable story that many ignore or claim it cannot be replicated. Using a theory and empirical evidence, we argue that one can learn more from miracles than failures. We suggest three key principles behind their success: (i) the support of domestic producers in sophisticated industries, beyond the initial comparative advantage; (ii) export orientation; and (iii) the pursuit of fierce competition with strict accountability.

Keywords: Economic growth, Commodity markets, Economic policy, Economic analysis, Economic theory, Industrial policy, technology, innovation, growth, diversification, Cherif, Rodrik, Taiwan province, productivity gain, government failure

JEL Classification: O25, O47, O57, E01, F1, O4, L31, F13

Suggested Citation

Cherif, Reda and Hasanov, Fuad, The Return of the Policy that Shall Not Be Named: Principles of Industrial Policy (March 2019). IMF Working Paper No. 19/74, Available at SSRN: https://ssrn.com/abstract=3377475

Reda Cherif (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Fuad Hasanov

International Monetary Fund ( email )

Washington, DC 20431
United States

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