"History is a wonderful thing, if only it was true"

Wednesday, September 01, 2010

Industrial Policy

I tend to think Industrial Policy is wrong ... except maybe the following

The global revival of industrial policy: Picking winners, saving losers | The Economist:

"The lessons of the past are clear. First, the more it is in step with a national or local economy’s comparative advantage, the more likely industrial policy is to succeed. Drives to spur high-tech entrepreneurship in areas of heavy manufacturing, for instance, face a struggle. According to Mr Lin of the World Bank, following comparative advantage has produced clear successes for some developing countries. Chile, for instance, moved from basic industries such as mining, forestry, fishing and agriculture to aluminium smelting, salmon farming and winemaking thanks to a number of government initiatives.

Second, policy is least prone to failure when it follows rather than tries to lead the market."

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