Literature Review of Industrial Policies

Literature Review of industrial PoliciesWhat types of industrial policies are there? Discuss, proportionally, the visit of brazil and South Korea.Discussing the literature of industrial insurance polity.The Industrial Policy device of a earth, sometimes shortened IP, is its official strategic causal agency to get ahead the development and egression of the manufacturing sector of the sparing.There are role of g everywherenment which takes measures aimed at improving the competitiveness and capabilities of domestic firms and promoting structural transformation. 4 A countrys infra construction (transportation, telecommunications and dynamism industry) is a major part of the manufacturing sector that usually has a gravest maven role in IP 1.What kinds of industrial policies are good? star aspect of this question is whether governments should use industrial policies to make the closely of their countrys current comparative advantage, or instead invest in mellower-productiv ity industries that are not competitive in the short-term. According to Justin Yifu Lin, World vernacular Chief Economist, where industrial policies fail this is due aroundly to governments inability to dress their efforts with their countrys resource base and level of development (Lin, 2010). For Lin, ontogeny countries should first seek to profit from the (mostly labour- and resource-intensive) products and services that they are currently most competitive in. They will accumu new human and physical uppercase in the process. This capital, Lin argues, house be reinvested over time in more fatty industries. An article in the The Economist draws similar conclusions. Ha-Joon Chang, in contrast, argues that developing countries should apply their comparative advantage. For Chang, the cost of moving capital between industries (e.g. from sewing machines to cable car plants) means that countries should actively promote high-productivity industries at an early symbolize in their development.Some argue that while manufacturing should be given special policy treatment, governments should not favour particular manufacturing industries (cf. UNIDO, 2011)2. One way to do this is by improving the infrastructure that manufacturers require, e.g. by promoting industrial clusters (UNIDO 2009). The creation of export-oriented Special stinting Zones is a well-known example of this. Critics argue that such an approach whitethorn only(prenominal) attract short-term investment, achieving little if any positive spillover into the wider economy (Good and Hughes, 2002 ).Another question is which kinds of industrial policy are most effective in promoting economic development. For example, economists debate whether developing countries should focus on their comparative advantage by promoting mostly resource- andlabour-intensiveproducts and services, or invest in high-productivityindustries, which may only become competitive in the longer term. An example of typical industrial policy can be import-substitution-industrialization (ISI), where trade barriers are temporarily oblige on some key sectors, such as manufacturing. By selectively protecting certain industries, these industries are given time to learn (learning by doing) and upgrade. Once competitive enough, these restrictions are lifted to expose the selected industries to the planetary market.ISI was most successful in countries with large populations and income levels which allowed for the consumption of locally produced products. Latin American countries such as Argentina, brazil nut, Mexico, and (to a lesser extent) Chile, Uruguay and Venezuela, had the most success with ISI. The Brazilian ISI process, which occurred from 1930 until the end of the 1980s, involved in boosting exports and discouraging imports (thus promoting the consumption of locally manufacture products), as well as the adoption of different diversify pass judgment for importing capital goods and for importing consumer good s. Moreover, government policies toward investment were not invariably opposed to immaterial capital the Brazilian industrialization process was found on governmental, private, and foreign capital, the first being directed to infrastructure and sinister industry, the second to manufacturing consumer goods, and the third, to the ware of durable goods (such as automobiles). Volkswagen, Ford, GM, and Mercedes all established production facilities in Brazil in the 1950s and 1960s.. Industrial policy covers many an(prenominal) areas of policy. In the historical and comparative literature on the industrialization processes in East Asia and Latin America, the following areas of industrial policy have been persistently disputed trade strategies, the role and extent of directed credits and subsidies, and earthly concern policies. In a country whose government has industrial policies, the market push up is more or less distorted due to government intervention. It can also be the case that the government uses industrial policy to jog market distortion resulted from domestic monopoly. However, there is no uniformity in the essence or the extent of industrial policies. Different paths chosen by the governments lead to different patterns of industrial development. Even similar strategies could exploit astir(predicate) different results when implemented under different environments. A scarcity of immanent resources has motivated South Korea to look at its human capital as its biggest endowment, and the country has invested heavily in education, science and technology, and a knowledge-based economy. The South Korea is one of the few countries in the world that has managed radically to transform its domestic economy from one based on agriculture to that of a leading world industrial power, with a constant increase in income per capita and a high growth pattern (Figure 1). Industrialisation and the shift from light to heavy and chemic industries boosted the rising growth pattern and favoured a virtuous integration into foreign markets (Figure 2).For many long time, Brazil employed various policies to alter its oil-bearing structure in order to increase the participation of sectors believed to have great electromotive force to generate economic growth. Behind these initiatives lay the idea that since the terms of exchange list over time to deteriorate as far as agricultural production is concerned, it would be appropriate for developing countries to make an effort to industrialize, principally by imposing protectionist tariffs Prebisch (1950) vocalizer (1950).1 The aim here is not to present a detailed report on Brazils industrial policy (IP, for now on) over the last few years for this, see Suzigan (1995), Guimares (1996) and Bonelli, Veiga Brito (1997), Suzigan Furtado (2006), but rather to describe briefly the tools utilise to promote industry. Between the 50s and the 80s, various types of trade protection were basically apply (im port taxes and non-tariff barriers such as the examination of similarity, indices of nationalization, contingency mechanisms, import licensing, preference in government procurement), along with export stimulation (favored exchange rates for exports of construct goods and tax exemptions) and subsidies for production in selected sectors (tax exemption and reduction and acceleration of capital depreciation). Besides this, there was an intense flow of credit to sectors considered to be anteriority and the strong direct presence of the State in various deep activities. To all this, add the obstacles against adopting new technologies (the Information Technology Law ( florilegium de Informtica), for example), large state investments in infrastructure (especially up to the late 70s) and expansion of higher education (principally as of the 70s). Brazilian industrial policy developed within the context of a paradigm shift in the relations between State and Society, in which the public sect or desire to bring about a business environment favorable to fertile investment, while the private sector busied itself with seeking out opportunities and making investments. Brazils Industrial, Technological and Foreign Trade Policy (PITCE), unveiled in March of 2004, has unique features which clearly distinguish it from previous policies. Its purpose is to bring increased efficiency and competitiveness to Brazilian companies and place them in international markets, thereby creating jobs and increasing incomes.________________________________________________________________________________________________1 Nonetheless, it must be remembered that there is no consensus concerning deterioration of the terms of trade see Hadass Williamson (2001) for pertinent references. On the other hand, Sarkar Singer (1991) find indications that the terms of trade for exports of manufactured goods from developing countries also tend to deteriorate, which would justify the prescriptions set forth by Prebisch (1950) and Singer (1950) even in a more advanced stage of development.2 These tools were not utilize with the same intensity in all periods. For further details, see Suzigan (1995)If IP appeared to be successful in changing Brazils productive structure, there is no indorse that it managed to promote sustained growth over many years. Comparison with countries that found themselves in a similar stage of development is quite illustrative. We see that Brazils per capita income in the 60s was higher than many of the countries in East Asia, but during the 80s it was surpassed by all of them. By way of illustration, in 1980 Brazils per capita income was 131% of South Koreas, 40% of japans and 108% of Taiwans, whereas in 2000 it had dropped to 50% of South Koreas, 28% of japans and 39% of Taiwans (see Figure 1).From the 90s on, a battlefront is perceived to open the economy and diminish the role of the State as entrepreneur. The impact of trade opening on industrial producti vity has been widely documented Ferreira Rossi-Jnior (2003), but this apparently was not translated into exceptionally high growth rates, especially if compared with previous periods (characterized by the intense use of vertical policies) or with the countries of East Asia (see Figure 1). This being so, many authors point to the performance of the Brazilian economy in the last fifteen years as evidence of the need to adopt sectorial policies see Kupfer (2003), for example.Work CitedWikipedia. Industrial policy UNIDO (United Nations Industrial Development Organization) www.unido.org Industrial Policy and Territorial Development. Lessons from Korea An industrial policy for Brazil (AlessAndro Teixeira. President of the Brazilian Agency for Industrial Development (ABDI) ) Import commutation and Industrialization in Latin Amercia Experiences and Interpretations. (Latin American Studies Association)Import Substitution Industrialization. feeling Inward for the Source of Economic Growth Industrial and innovation policies in Brazil recent paths and main challenges (Institute for Manufacturing)