Industrial Policy: Growth Elixir or Poison?
Abstract
The debate about industrial policy occasioned by the East Asian financial crisis is the latest chapter in an ongoing discussion about the effectiveness of selective government intervention in fostering rapid industrial growth. The crisis that began in the Republic of Korea in 1997 and the weak growth in Japan over much of the 1990s have prompted a reexamination of the effectiveness of the government actions in the two countries that pursued sectoral selectivity most intensively. If indeed industrial policies were important in accelerating growth, there may be lessons for other countries still in the early stages of industrialization. Conversely, if the magnitude of the contribution was small, more conventional policies should be pursued unless it is assumed that governments can improve on the efforts of Japan and Korea.
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Pack (2000) finds that sectors encouraged in Japan and Korea had few linkages with nonfavored sectors through input-output relations, and there is little evidence of labor flowing from favored to neglected sectors.
“However, Pack (2000) finds that sectors that were encouraged in Japan and the Republic of Korea had few linkages with nonfavored sectors through input-output relations, and there is little evidence of labor flowing from favored to neglected sectors, a likely mechanism for the transmission of knowledge.”
From Is There a Case for Industrial Policy? A Critical Survey (2006) · cites this paper as Pack (2000)
Pack (2000) estimates that even an assumed successful industrial policy in Japan and Korea could have had at most a roughly 0.5 percentage point increase in total GDP growth rate of roughly 10 percent over the relevant periods.
“Pack (2000) follows a different strategy, assuming that total factor productivity increased in favored manufacturing sectors in both Japan and the Republic of Korea and estimates how much of an impact even an assumed successful policy could have had on the growth of gross domestic product.The most favorable estimate is a roughly 0.5 percentage point increase in total gross domestic product growth”
From Is There a Case for Industrial Policy? A Critical Survey (2006) · cites this paper as Pack (2000)
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Is There a Case for Industrial Policy? A Critical Survey
Pack, H. (2006) · The World Bank Research Observer · doi:10.1093/wbro/lkl001 · Cited by 589 · see citing works
Self-citation
- Authors
- Pack, H.
- Corresponding author
- Pack, H.
- Venue
- The World Bank Research Observer
- Publisher
- Oxford University Press (OUP)
- Published
- 2000-02-01
- Volume
- 15
- Issue
- 1
- Pages
- 47-67
- ISSN
- 0257-3032 (ISSN-L)
- 1564-6971
- OpenAlex
- W2167230927
- Cited by
- 160
- References
- 0
- Citations by year
- 2026: 2 · 2025: 6 · 2024: 1 · 2023: 6 · 2022: 6 · 2021: 5 · 2020: 46 · 2018: 21 · 2017: 8 · 2016: 5 · 2015: 2 · 2014: 4 · 2013: 4 · 2012: 3
- FWCI
- 7.66
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The World Bank Research Observer (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- HighWire Press Open Archive (submittedVersion)
- Topics
- Social Sciences › Political Science and International Relations › Asian Industrial and Economic Development
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Keywords
- industrial policy, Asian financial crisis, state intervention, industrial growth, economic growth, South Korea, Japan, early industrialization, policy effectiveness
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