wade notes - Industrial Policy Prelim 2 Economic...

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Industrial Policy Prelim 2 Economic Liberalization and the Computer Industry: Comparing Outcomes in Brazil and Mexico Liberalization leads to lower prices and more rapid diffusion of computer use through the economy, but at the cost to domestic computer firms who were harmed by foreign competition. Market liberalization driven partly by neoliberal ideology and pragmatism in an increasingly interconnected global economy. Ideas on liberalization policies have been based on the theoretical underpinnings of neoclassical economics which argues that the market is the best mechanism for both allocating resources and determining investment decisions in virtually every context The impacts of liberalization are in fact influenced by national context including: a) the respective country’s economic and political environment, its geographical location, its information infrastructure and national capabilities such as human resources and technology, and the structure and competition of computer production and the extent of computer use at the time of liberalization Environment Liberalization Impacts Global environment Driving forces Computer industry structure Political environment Timing and Place Computer production Domestic Market Remaining barriers IT use Location IT Policies Trade National Capabilities The global environment influences the policies of national governments and defines the opportunities and challenges facing policy makers and business leaders **The development strategy of Singapore In this era, a key issue for strategic trade theory is whether and how a country can still influence its cross-sector resource allocations with industrial policy. Conceptually, industrial policy is supposed to overcome coordination failure, not to restrict trade; Historically, Singapore is a generally acknowledged showcase in promoting industrialization, even though its domestic market is too Lilliputian “small” for protection
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Singapore succeeded by harnessing the trend in international trade, namely, fragmented production, the topic for the seminal contribution In the immediate years after World War II, export pessimism made de-linking the mainstream in development economics Singapore becomes ‘fully developed’ by means of a two-pronged strategy (adopted around 1962-1964 a. To leapfrog the region – to industrialize for Singapore, a small, remote and pre-industrial state, both the source of technology and the market for output must be found in the industrial world, half a globe away. Thus looms the inherent disadvantage of distance: the transaction cost to interact with the industrial economies afar. Means must be found for compensation if Singapore is ever to be ‘fully developed’, as a ‘First World oasis’ is part of the First World. b.
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This note was uploaded on 06/25/2009 for the course ECON 4450 taught by Professor Wan during the Spring '09 term at Cornell University (Engineering School).

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wade notes - Industrial Policy Prelim 2 Economic...

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