10.pdf - See discussions stats and author profiles for this publication at https\/www.researchgate.net\/publication\/326840598 Industrial Policy and

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See discussions, stats, and author profiles for this publication at: Industrial Policy and Economic Transformation Chapter · January 2012 CITATIONS 6 READS 167 3 authors , including: Some of the authors of this publication are also working on these related projects: Development Finance View project Joao Carlos Ferraz Federal University of Rio de Janeiro 57 PUBLICATIONS 826 CITATIONS SEE PROFILE Luciano Coutinho University of Campinas 14 PUBLICATIONS 39 CITATIONS SEE PROFILE All content following this page was uploaded by Joao Carlos Ferraz on 02 July 2019. The user has requested enhancement of the downloaded file.
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1 Chapter in (eds) Javier Santiso and Jeff Dayton-Johnson: The Oxford Handobook of Latin American Political Economy; OUP, 2012 INDUSTRIAL POLICY AND ECONOMIC TRANSFORMATION 12 Luciano Coutinho, João Carlos Ferraz, André Nassif, Rafael Oliva 3 1. The relevance of industrial policies for economic development From the Smithian classic tradition and the 1950’s seminal work on growth (Solow, 1956) to recent endogenous growth contributions (Romer, 1986); from the forefathers of development economics (Rosenstein-Rodan, 1943; Prebisch, 1949; Hirschman, 1958) to Schumpeter and his evolutionist followers (Freeman 1987, Nelson and Winter, 1982), considerable consensus exists on the determining factors of economic development. The development of a country is related to economic transformation deriving from technological change and from increasing the knowledge content of economic activities which induce as well as sustain productivity gains (Lin & Monga 2010, Krugman 1990). But how is such a machine of growth put into motion? Do Schumpeterian entrepreneurs and the market suffice? Gerschekron (1962) has shown that there are rare cases of countries managing to successfully overcome economic backwardness in the absence of an active State. Along the same lines, Chang (2003:2) sustains that “developed countries did not get where they are now through the policies and the institutions that they recommend to developing countries today. Most of them actively used “bad” trade and industrial policies, such as infant industry protection and export subsidies” . Amsden (2001:185) also demonstrates that “as a catch-up strategy, free trade appears to have been limited to Switzerland and Hong Kong. Evans (2008:1) is even sharper: “history and development theory support the proposition: ‘no developmental state, no development´” . 1 This work is dedicated to Chris Freeman for his role in fostering a renewed research agenda on economic development based on classics, such as Schumpeter and Kontratieff. 2 An earlier version of this text was discussed at the InnovaLatino Experts Meeting: Innovation and Development in Latin America , held by the OECD Development Center (10/01/2009, Buenos Aires). The authors would like to thank Mario Cimoli and Wilson Peres who kindly read preliminary drafts of this chapter.
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