On the importance of openness for industrial policy design in developing countries
Working paper
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http://hdl.handle.net/11250/163050Utgivelsesdato
2007-01Metadata
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Sammendrag
How should industrial policy be designed in developing countries?
Should industrial policy be targeted to a few sectors or be more broad
based and therefore more neutral? Our theoretical analysis demonstrates
that access to foreign markets is key to answering this question.
We show that in a less open economy, industrial policy should be targeted,
while in a more open economy, broad based policies are likely
to be more effective. One implication of this results is that deregulation
is likely to be more successful in a relatively open economy than
in a more closed economy. Indeed, deregulation with limited foreign
market access may lead to deindustrialization. We provide empirical results that support these predictions.
Utgiver
Norwegian School of Economics and Business Administration. Department of EconomicsSerie
Discussion paper2007:3