Waylaid Dialectic

July 23, 2010

Friday Links! Somewhere Between Hair-shirted and Harebrained

Ah yes, the future, I’d been trying not to think about that. Matt Ridley has though, and he likes what he sees: free markets, free people and the triumph of  reason. Rather! Mark Boyle, on the other hand is, to put it mildly, somewhat less sanguine about progress and technology. In order to save our planet and ourselves he’d have us return to a neo-primitive past. Me? In my optimistic moments at least, I’d like to think they’re both wrong and that there’s some hope for the future somewhere between the harebrained and the hair-shirted, which is probably why I really enjoyed this review in OpenDemocracy of Ridley and Boyle’s recent books.

Sticking to the future for the time being, also worth a read is Charles Kenny’s critique of the New Malthusians at Foreign Policy.

Meanwhile, an interesting article at VoxEu points to the fact (I think?) that much (but not all) of the recent improvements in life expectancy in developing countries have come from reduced infant mortality.

Did someone say economics? As you’ll know this blog has a policy of not discussing economics without at least one mention of industrial policy. Here we go: a great debate at the Economist between Rodrik and Lerner on IP.

Speaking of economic debates, how ’bout that fiscal stimulus aye? Barry Eichengreen has an interesting column at Project Syndicate.

While, in a feisty thread at Aidwatch, Michael Clemens offers a nice defence of quantitative research:

Numbers are one of many ways to organize information. While they can in some cases have the drawback of oversimplifying complex phenomena, they have the large advantage of creating transparency in how hypotheses are formulated and tested (provided one takes the time to study quantitative methods), and thus contribute to the falsifiability of claims.

And, closing out the economics section of this post, are people happier when insulated from market mechanisms? Some evidence.

Back in the qualitative world: a death in the Middle East. Not just any death though; one that makes the media; one that re-makes it; one that is made by it…Interesting analysis by David Kenner, Adam Shatz and Glen Greenwald.

Finally, having offered a qualified defense of AusAID in the face of a not particularly high quality media storm, it’s worth noting these two articles, both good and both pretty damming. The Crikey article is part of a series, with the rest of the series available to subscribers to that news-site.

[Update: just stumbled across a really good read - Michael Clemens on the Congo at 50.]

April 19, 2010

Industrial Policy

Filed under: Governance,Trade — terence @ 10:48 am
Tags: ,

I missed this when it came out, but well worth a read – Dani Rodrik at Project Syndicate on Industrial Policy.

I’m persuaded: good industrial policy aids economic development; it may even be essential (can you name any country which has developed without something resembling IP?*)

As for what ‘good’ means when it comes to industrial policy, Rodrik provides a handy how to:

First, industrial policy is a state of mind rather than a list of specific policies. Its successful practitioners understand that it is more important to create a climate of collaboration between government and the private sector than to provide financial incentives. Through deliberation councils, supplier development forums, investment advisory councils, sectoral round-tables, or private-public venture funds, collaboration aims to elicit information about investment opportunities and bottlenecks. This requires a government that is “embedded” in the private sector, but not in bed with it.

Second, industrial policy needs to rely on both carrots and sticks. Given its risks and the gap between its social and private benefits, innovation requires rents – returns above what competitive markets provide. That is why all countries have a patent system. But open-ended incentives have their own costs: they can raise consumer prices and bottle up resources in unproductive activities. That is why patents expire. The same principle needs to apply to all government efforts to spawn new industries. Government incentives need to be temporary and based on performance.

Third, industrial policy’s practitioners need to bear in mind that it aims to serve society at large, not the bureaucrats who administer it or the businesses that receive the incentives. To guard against abuse and capture, industrial policy needs be carried out in a transparent and accountable manner, and its processes must be open to new entrants as well as incumbents.

Excellent advice. Or, at least, excellent advise for Sweden or any other part of the reasonably well governed world. The trouble is the developing countries of our planet don’t have governments like Sweden – think low capacity bureaucracies, corruption, clientelism, unstable polities. And the real question – the real curly question – is how do you get good industrial policy from a bad government? And, in the absence of this, is bad industrial policy better than nothing?

* Hong Kong maybe. But they hardly count given their circumstances and given their ‘policy’ of permitting flagrant violations of intellectual property rights.

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