Industrial policy for growth

Farla, Kristine (2012). Industrial policy for growth. UNU-MERIT.

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  • Author Farla, Kristine
    Title Industrial policy for growth
    Publication Date 2012
    Publisher UNU-MERIT
    Abstract This study investigates the extent to which countries' industrial policy package is successful in stimulating growth. We use perception based data for 59 countries that covers 22 policy aspects and seek to unbundle different dimensions of industrial policy. Using principal component analysis we distinguish between industrial policy that stimulates industry development, 'pro-business' policy, and industrial policy that promotes the development of free markets, 'pro-market' policy. We find that there is a positive relation between these policies which suggests that at the macro level there is no trade-off between the implementation of these two policy types. Furthermore, fixed effect analysis suggests that pro-business policy has a positive effect on growth but not on income. We find no clear relation between pro-market policy and economic development. Finally, we assess the effect of innovation and technology policy on economic performance using a subset of the pro-business type variables. We find that such policy is positively related to both growth and income. This paper is an update of the original paper published in 2012.
    Keyword Industrial policy
    Growth
    Competition
    Innovation
    JEL L50
    O11
    O25
    O43
    Copyright Holder UNU-MERIT
    Copyright Year 2012
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    Created: Wed, 11 Dec 2013, 17:24:26 JST