Development and Modern Industrial Policy in Practice

Development and Modern Industrial Policy in Practice

Issues and Country Experiences

Edited by Jesus Felipe

Development and Modern Industrial Policy in Practice provides an up-to-date analysis of industrial policy. Modern industrial policy refers to the set of actions and strategies used to favor the more dynamic sectors of the economy. A key aspect of modern industrial policy is embedding private initiative in a framework of public action to encourage diversification, upgrading, and technological dynamism to achieve development in the twenty-first century. The book reviews key questions that policymakers ask about industrial policy, such as: who selects sectors; what is the rationale for sector selection; what are the main tools to promote sectors; what is the role of human capital; and what are the mechanisms for monitoring and evaluation? Expert contributors discuss how to undertake industrial policy effectively and examine the experiences of Australia, the EU, the Republic of Korea, Malaysia, and the US.

Chapter 11: Industrial policy: the Australian experience

William Francis Mitchell

Subjects: economics and finance, industrial economics, industrial organisation, politics and public policy, public policy, social policy and sociology, labour policy

Extract

Australia’s development demonstrates that it is possible for a small and open economy heavily reliant on primary commodity exports—and initially without a strong and diversified industrial base—to achieve high per capita income with the right mix of domestic and external policies. The country’s wealth of experience in industrial policy—particularly in building and dismantling tariff protection and direct skills formation—offers important insights into designing policy to promote economic diversification and international competitiveness. The state has played a central role in Australia’s industrial progress. Successive governments have recognized that the state has to be responsible for regulations that may limit market activity in the interests of economic stability, such as promoting competition through regulation. A comprehensive tariff protection regime initially helped the manufacturing sector become internationally competitive.

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