Industrial Policy in an Era of Globalization: Lessons from Asia

Globalization reigns supreme as a description of recent economic transformation―and it carries many meanings. In the policy realm, the orthodox terms of engagement have been enshrined in the "Washington consensus." But disappointing results in Latin America and transitional economies―plus the Asian financial crisis―have shaken the faith in Washington and elsewhere. One response has been to hark back to the more statist policies that the consensus marginalized. In this regard, Japan, Korea, and Taiwan are promoted as the poster nations that have derived great benefits from increasing integration with the international economy, without surrendering national autonomy in the economic or cultural spheres, effectively beating the West at its own game. The fundamental questions addressed in this monograph are whether industrial policy was indeed a major source of growth in these three economies, and if so, can it be replicated under current institutional arrangements, and if so, is it worth replicating, or, would developing countries today be better off embracing the suitably refined orthodoxy?

Marcus Noland, executive vice president and director of studies, has been associated with the Institute since 1985. From 2009 through 2012, he served as the Institute's deputy director. His research addresses a wide range of topics at the interstice of economics, political science, and international relations. His areas of geographical knowledge and interest include Asia and Africa where he has lived and worked, and the Middle East. In the past he has written extensively on the economies of Japan, Korea, and China, and is unique among American economists in having devoted serious scholarly effort to the problems of North Korea and the prospects for Korean unification. He won the 2000–01 Ohira Memorial Award for his book Avoiding the Apocalypse: The Future of the Two Koreas.

Howard Pack has been a professor of business and public policy and professor of economics at the Wharton School (University of Pennsylvania) since 1986. He has been a professor of management there since 1995 and was the professor of city and regional planning (1986-94). He has also taught at Swarthmore College and Yale University. He has served as a consultant for a host of World Bank projects over the past three decades and has been an adviser to the Bank's Global Development Network since 1999. He is the author or coauthor of The Arab Economies in a Changing World (2007), Productivity, Technology and Industrial Development (1987), and Structural Change and Economic Policy in Israel (1971).