Industrial Success And Failure In A Globalizing World

Date: Feb, 2003
ODID Working Paper No. 102
Author(s): Sanjaya Lall (QEH)

Globalization is a pervasive influence on industrialization in the developing world. As the embodiment of technological progress and more open markets, it offers huge productive benefits to developing countries. However, its effects are very uneven. It is driving a growing wedge between the (relatively few) successful countries and the (large mass of) others. The wedge is not a temporary one, a 'J-curve' that will reverse itself if countries persist with liberalization. It reflects underlying structural factors that are very difficult to alter in the short to medium term. Because of cumulativeness in these structural factors, divergences are likely to carry on growing unless measures are undertaken to reverse them. Development policy has to address these growing structural gaps and to reverse or relax the stringent rules of the game that constrain the use of (previously successful) industrial policy. Such successful industrial policies have taken many different forms and countries have to choose combinations that suit the demands of current globalization.

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