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| government action intended to improve the country's well being through its impact on specific industries |
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| industrial policy may launch new high technology industries, enhance the competitiveness of existing industries, sustains job and firms in declining industry |
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| Definition and Aims of industry policy |
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| under protectionism, industry policy means government assistance to industries, creating barriers to trade, tariffs to increase cost of imported goods, quotas to limit the quantity of imported goods, this type of industry policy is generally not compatible with neoclassical economics |
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| Under free trade, industry policy means |
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| WTO establishes rules, government principally concerned with creating an economic environment which is supportive of private enterprise. Government focuses on tax reform, labour market reform, and monetary policy |
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| critized by thoes who point to industrial success in EU & Japan |
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| Anticipatory Industry policy |
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refers to sectoral level intervention
state plays key role in industry
designed to meet long term goals of national economic development and industrial transformation |
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directed to particular sectors of industry
distinction between targeted intervention to promote new industries and intervention designed to manage decline in existing industries
Industry policy is controversial because of its association with state-led econoomic adjustment
focus on the outputs of the production process |
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| Pro and con for industry policy |
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proprovides start up aid for new industries, offer adjustment assistance to traditional industry, and restructures the marketplace for specific goods
con-government has neither the economic intelligence nor the political fortitude to manage industrial policy programs properly |
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