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What's new in the new industrial policy in Latin America ?

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  • Devlin, Robert
  • Moguillansky, Graciela

Abstract

Latin America was an aggressive practitioner of industrial policies (IP) in the years 1950-1980. During much of the period the general practice was in line with the then mainstream thinking in development economics. Significant growth, industrialization and modernization took place, but serious flaws in concept and execution of the IP caused them to fail as a vehicle for economic catch-up with rich countries in an era of an expansive world economy. A very serious Latin American external debt crisis in the 1980s, coupled with the ascendance in international discourse of arguments for retrenchment of the State in economics and life, contributed to a pendulum swing in the region to the policies of the so-called Washington Consensus. Major structural adjustments and reforms designed to bring the free market forward and push back the market governance of the State dominated the 1980s and 1990s. In recent years, however, countries in Latin America have witnessed a renaissance in the deployment of systematic IP. This paper explains why IP have emerged and why they are a necessary step for the more profound structural change needed to drive sustained high rates of growth. Based on illustrated cases which we think reflect the current state of affairs in the region, the paper highlights the nature of the shift to a more proactive state promotion of industrial and services upgrading, as well as the important new characteristics of the current outbreak of IP which are different from the ones of the past and offer hope for greater success. It also identifies a legacy of some bad habits which linger and need to be addressed with urgency if the new trend is to be successfully consolidated.

Suggested Citation

  • Devlin, Robert & Moguillansky, Graciela, 2012. "What's new in the new industrial policy in Latin America ?," Policy Research Working Paper Series 6191, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6191
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    1. Borges, Michelle da Silva & Calegario, Cristina Lelis Leal & Campos Pereira Bruhn, Nádia, 2021. "Industrial policy, economic growth and international engagement: a comparison of selected countries," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    2. Ben Ross Schneider, 2017. "Unfinished legacy: understanding reciprocity, business groups and MNCs in Latin America," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 10(1), pages 111-125.
    3. Patrick Low & Julia Tijaja, 2014. "Effective industrial policies and global value chains," Chapters, in: Richard Baldwin & Masahiro Kawai & Ganeshan Wignaraja (ed.), A World Trade Organization for the 21st Century, chapter 5, pages 110-129, Edward Elgar Publishing.

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    Public Sector Corruption&Anticorruption Measures; E-Business; ICT Policy and Strategies; Climate Change Economics; Economic Theory&Research;
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