Working Paper #2012-039
Industrial policy for growth
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.
- Keywords
-
- Industrial Policy
- Growth
- Competition
- Innovation
- JEL codes
-
- L50
- O11
- O25
- O43
Cite this as
APA 7th ed.Farla, K. (2012). Industrial policy for growth (UNU-MERIT Working Paper No. 2012-039). UNU-MERIT. https://unu-merit.nl/publications/working-papers/abstract/?id=4715