Over the past three decades there has been a resurgence of interest in how industrial policy can help nations achieve higher levels of economic development (Rodrik 2005). Drawing on the experience of East Asian countries and their catching-up trajectories after the Second World War, authors such as Amsden (2001) or Rodrik (2005) identified the importance of heterodox government policies in creating incentives to innovation and technological development. They were deemed heterodox in comparison to the supposed consensus around supply-side approaches, epitomised by the ten prescriptions of the ‘Washington consensus’. These heterodox policies mostly involved supporting strategic sectors of economic activity through fiscal policy, subsidies for risky innovative activities and trade policy favouring national firms (Rodrik 2005). Crucially, they also involved mechanisms to prevent rent-seeking and cronyism, through the use of reciprocity mechanisms that forced firms who received support to meet developmental targets (Amsden 2001).
New industrial policy and the role of executive agencies at the subnational level
Ingenio Working Paper Series