Issues and Country Experiences
Edited by Jesus Felipe
Chapter 1: Modern industrial policy
The development landscape of the twenty-first century will be significantly different from that of the second half of the twentieth century, when a small group of economies (mostly in Asia) made significant progress and some achieved high-income status. The emergence of India and the People’s Republic of China (PRC), the development of many new labor-saving technologies, the fact that developed countries will not be keen on running deficits that facilitate export-led growth and that the World Trade Organization places severe restrictions on developing countries to conduct industrial policies (widely used earlier) mean that reproducing what this small group of economies did will be next to impossible in the coming decades. For these reasons, policymakers in developing countries need to understand that the key to achieving high-income status will be to induce rapid structural change by moving from traditional primary products to nontraditional industrial products, and to find niches in industrial products, consumer products with high-income elasticities of demand, and modern services.