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International Handbook on Industrial Policy

Edited by Patrizio Bianchi and Sandrine Labory

This timely and much-needed Handbook reconsiders an old topic from a fresh perspective, raising a number of new, interesting and worthwhile issues in the wake of ten years of globalization. This comprehensive analysis illustrates that old-style industrial policies whereby the government directly intervened in markets, and was often the producer itself, are no longer relevant. Structural changes occurring in economies – summarized in the term ‘globalization’ – are triggering the definition and implementation of new industrial policies. The contributors, leading experts in their field, unite to evaluate this shift of over a decade ago.
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Chapter 16: Decentralizing Industrial Policies: Threat or Opportunity in Developing Countries?

Leandro Sepulveda and Ash Amin


Leandro Sepulveda1 and Ash Amin 1 Introduction Over the last decade a new approach to industrial policy has been maturing, after a long period of abandonment of state-centred, top-down and product-specific industrial policies. The new approach, stimulated by the revival of traditional industrial districts as well as new patterns of regional revival based on high-tech industries, is bottom-up, associationalist and cluster-based. As an approach that does not radically threaten the market foundations of neoliberal thinking that has become so prevalent around the world, the new decentralized approach to industrial policy has rapidly grown from its modest beginnings into a new policy orthodoxy for dealing with spatial inequality through attempts to boost local economic competitiveness. In this chapter we examine the central tenets of the new policy approach, which combines supply-side intervention with regional boosterism as a new form of industrial policy. We then critically review the applicability of the new approach in the context of countries with fragile or absent macroeconomic stability, based on a detailed case study of a relatively buoyant industrial district in Argentina. We conclude that decentralized policies in the absence of a stable and interventionist macroeconomic policy framework risk becoming, at best, blunt instruments and, at worst, unwitting agents in a broader policy framework that might actually be increasing economic inequality. 2 The new industrial policy approach The shift in the nature of industrial policy has been advocated by different schools of thought which are grouped and referred to here as ‘the new industrial...

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