@inproceedings{Hodler2006Industrial,
abstract = {Theoretical analyses of industrial policy normally restrict the range of
possible outcomes by abstracting from either market or government
failures. This paper thus studies industrial policy and its effectiveness
in a model that includes both market and government imperfections.
We introduce a public agency responsible for industrial policy into the
model of Hausmann and Rodrik (2003), and assume that this agency
has limited information and is partly politically motivated. We further
extend the model to allow the public agency to communicate with en-
trepreneurs and the entrepreneurs to engage in rent seeking. We find
that industrial policies are ineffective if the public agency is poorly
informed, but that they are not necessarily ineffective if the public
agency is highly politically motivated. Given a highly politically mo-
tivated public agency, industrial policies are effective if and only if the
institutional setting ensures that such policies are modest e.g. by re-
stricting the public agency?s budget. Moreover, our model helps us to
understand why the same industrial policies that have failed elsewhere
have been relatively successful in South Korea and Taiwan.},
author = {Roland Hodler},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {O20; H25; L53; L52; 330; Industrial Policy; Market and Government Failures; Political Economy},
language = {eng},
number = {13},
series = {Proceedings of the German Development Economics Conference, Berlin 2006 / Verein f\"{u}r Socialpolitik, Research Committee Development Economics},
title = {Industrial Policy in an Imperfect World},
url = {http://hdl.handle.net/10419/19841},
year = {2006}
}
