Policy Innovations The central address for a fairer globalization

A publication of the Carnegie Council

On the Changing, Not Ending, Significance of Industrial Policy

By Julius Kiiza

October 18, 2005

From the Introduction

Debates on the developmental role of domestic institutions and the viability of country-specific industrial policies have assumed centre-stage in contemporary development circles. The debate appeared, for a time, to be polarized between the theorists of global market integration and those that are critical of the globalization orthodoxy. The former group celebrated the convergence of different species of capitalism on the Anglo-American norm of “free trade”; the latter underscored cross-national variations in capitalist development. One group announced the rise of the “borderless world” signifying the sovereignty of private capital over sovereign states; the other documented the enduring significance of nation-states in the “global” political economy. One team celebrated the “death” of industrial policy; the other appreciated the changing, but not ending, significance of industrial policy. That effective industrialization is strongly associated with the developmental role of institutions is no longer debatable. That the economic dynamism of the Northeast Asian tigers—or even Ireland—is linked to distinctly national economic policies is not debatable either. What is debatable is the vitality of country-specific industrial policies for latecomers (such as Uganda) that seek to industrialize in the current era of globalization. Do nationalistic industrial policies make sense in the current age of global governance, WTO rules and increased reliance on foreign trade?

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