Industrial Policy, Learning and Development
Working Paper #298
By Professor Stiglitz:
Abstract: Industrial policies have played an important role in successful development. Through these policies, governments intervene in the market’s sectoral allocation of resources and choice of technologies. Earlier industrial policies had a narrow remit and made use of a limited number of instruments. This paper argues that they should pursue broader objectives with a wider range of instruments. In particular, it argues that ‘learning’ is central to development, there are intrinsic market failures associated with learning, and that carefully crafted industrial policies can promote learning and development.
Keywords: industrial policies, learning, learning-by-doing, technological progress, Washington Consensus
Acknowledgements: This paper is based on joint work with Bruce Greenwald. Research and editorial assistance from Debarati Ghosh, Poorya Kabir, and Eamon Kircher-Allen, is gratefully acknowledged.
About the Author
Initiative for Policy Dialogue (IPD)
Joseph E. Stiglitz is co-President of the Initiative for Policy Dialogue, and Chairman of the Committee on Global Thought at Columbia University. He is University Professor at Columbia, teaching in its Economics Department, its Business School, and its School of International and Public Affairs. He chaired the UN Commission of Experts on Reforms of the International Monetary and Financial System, created in the aftermath of the financial crisis by the President of the General Assembly. He is former Chief Economist and Senior Vice-President of the World Bank and Chairman of President Clinton’s Council of Economic Advisors. He was awarded the Nobel Memorial Prize in Economics in 2001.