
Contents
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1. The Inevitability of Industrial Policies 1. The Inevitability of Industrial Policies
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The Instruments of Industrial Policy and a Guide to Part 3 The Instruments of Industrial Policy and a Guide to Part 3
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2. The Special Importance of Industrial Policies for Developing Countries 2. The Special Importance of Industrial Policies for Developing Countries
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Closing the Knowledge Gap Closing the Knowledge Gap
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How Structural Adjustment Policies Stifled Growth How Structural Adjustment Policies Stifled Growth
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The Washington Consensus and Learning The Washington Consensus and Learning
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Learning and One-Size-Fits-All Policies Learning and One-Size-Fits-All Policies
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Industrial Policy and the Distinctive Circumstances of Developing Countries Industrial Policy and the Distinctive Circumstances of Developing Countries
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3. The Objectives of Industrial Policy 3. The Objectives of Industrial Policy
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Structural Transformation Structural Transformation
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Unemployment Unemployment
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Environment Environment
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Inequality Inequality
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4. Trade Policy 4. Trade Policy
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5. Making the Most of One’s Natural Resources 5. Making the Most of One’s Natural Resources
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6. History 6. History
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Historical Experiences with Trade Interventions Historical Experiences with Trade Interventions
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War Time War Time
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Does Latin America Demonstrate the Failure of Industrial Policies? Does Latin America Demonstrate the Failure of Industrial Policies?
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China and India China and India
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History Shows That Industrial and Trade Policies Can Work History Shows That Industrial and Trade Policies Can Work
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7. Political Economy 7. Political Economy
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Framing the Question the Right Way Framing the Question the Right Way
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Industrial Policies Are Not About Picking Winners Industrial Policies Are Not About Picking Winners
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Policies to Address Political Economy Problems Policies to Address Political Economy Problems
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Governance and Institutional Reform Governance and Institutional Reform
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Implications of Governance Deficiencies for the Design of Industrial Policies Implications of Governance Deficiencies for the Design of Industrial Policies
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A Methodological Response to the Political Economy Critique A Methodological Response to the Political Economy Critique
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Liberalization and Political Economy Liberalization and Political Economy
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8. Some General Reflections on Industrial Policy 8. Some General Reflections on Industrial Policy
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Theory of the Second Best Theory of the Second Best
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Industrial Strategies Industrial Strategies
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9. Concluding Remarks 9. Concluding Remarks
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Twelve The Role of Industrial and Trade Policy in Creating a Learning Society
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Published:June 2014
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Abstract
This chapter focuses on one of the central reasons for industrial policies: Markets on their own do not create a learning society; the structure of the economy that results from market forces results in less learning—and less growth—than there could or should be. It explains why many of the arguments used against industrial policies are misplaced and suggests how these might more effectively contribute to creating a learning economy. The chapter first discusses why much of the debate about industrial policies is misplaced. It then turns to developing countries, arguing that these policies are especially relevant to such countries. In doing so, it refutes the long-standing Washington consensus presumption against industrial policies. Next, it considers the objectives of industrial policy; discusses trade policy as an instrument of industrial policy; and examines one of the most important issues of industrial policy facing many developing countries—how to make the most of their natural resources. The remainder of the chapter provides more general reflections on industrial policy—its historical role, the role of political economy, and strategic considerations.
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