The role of industrial policy in development

The global financial crisis has led to a reassessment of the role of the state vis-a-vis the private sector in promoting growth and development. However, the role of industrial policy has long been the subject of extensive debates. This was most recently illustrated in the September 2009 issue of Development Policy Review, which included a high profile DPR Debate that brought together two well-known researchers, Justin Yifu Lin, Chief Economist and Senior Vice-President of the World Bank, and Ha-Joon Chang, Reader in the Political Economy of Development, Faculty of Economics, University of Cambridge, asking Should industrial policy in developing countries conform to comparative advantage or defy it? Both support a strong role for the state in promoting economic development but differ on the specific role that industrial policy can play.

Following on from this recent debate, ODI invited them both to further the discussion on what role industrial policy can play in promoting development. Presentations from the speakers were followed by comments from Dirk Willem te Velde (ODI), who discussed the topic in light of the ongoing work with the Research Programme Consortium for Institutions on Pro Poor Growth on state-business relations and industrial policy in a number of African countries, and Karen Ellis (ODI), who discussed the topic in light of her recent work on competition policy in developing countries.