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11.491J Industrial Development & Policy Analysis

11.491J Industrial Development and Policy Analysis   Fall 1998 Monday, 9:00 - 12:00, Room 3-401 Professor Alice H. Amsden The focus of this course is on government policy in the transformation of post World War II "late industrializing" countries (which have had to develop without the competitive asset of proprietary pioneering technology). Some comparisons with the first and second industrial revolutions, and postwar Europe and the United States, are also examined. The questions of analytical interest are: why the role of government in industrial transformation has grown over the last two centuries; what theories, if any, explain such a change and intervention generally; why such intervention is politically and intellectually controversial; how specific policies have influenced industrial development; and why some governments have performed better than others in-implementing policies. The fields of policy intervention that are examined include: foreign trade, investment and industrial promotion; regional planning and land and natural resource use; privatization; and technology development. Case material is drawn widely from eastern Europe; Latin America; Africa; and especially eastern and southeastern Asia. Entries followed by [ref] are for reference only. Most other readings will be available in a "reader" that will be available in Rotch Library. The mechanics of the course are described after the readings are presented. WEEK l The Growing Breadth and Depth of Government Intervention. Taylor, Arthur J. 1972. Laissez-faire and State Intervention: Nineteenth-century Britain, Macmillan (pp. 1-77). Gerschenkron, Alexander. 1962. Ch. 1: " Add " in Economic Development in Historical Perspective, Harvard UP, pp. 5-30. Lee, W. R. 1988. "Economic Development and the State in Nineteenth-Century Germany," Economic History Review, 2nd ser., XLI, 3, pp. 346-367. Chandler, Alfred D. Jr. 1980. "Government Versus Business: An American Phenomenon", in John T. Dunlop (ed.), Business and Public Policy, Harvard UP, ch. 1, pp. 1-11. Faulkner, Harold U. 1961. The Decline of Laissez Faire. 1897-1917, Vol. VII, The Economic History of the United States, Holt, Rinehart and Winston [ref]. Brinkley, Alan. 1989. "The New Deal and the Idea of the State", in Steve Fraser and Gary Gerstle (eds.), The Rise and Fall of the New Deal Order, 1930-1980, Princeton UP. [ref] [U.S.] Council Economic Advisers. 1994. ch. 5. "Microeconomic Initiatives to Promote Efficiency and Productivity," in Economic Report of the President, USGPO. [ref] Shonfeld, A. 1965. Modern Capitalism: The Changing Balance of Public and Private Power, Oxford UP. [ref] Sheahan, John. 1963. Promotion and Control of Industry in Postwar France, Harvard UP. [ref] Scott, Bruce R. and Audrey T. Sproat. 1983. National Industrial Planning: France and the EEC, Course Module Series, Harvard Business School. [ref] Johnson, Chalmers. 1982. ch. 3: "The Rise of Industrial Policy," in MITI and the Japanese Miracle: the Growth of Industrial Policy. 1925-1975, Stanford UP., pp. 83-115. Moreno, Juan Carlos and Jaime Ros. 1994. "Market Reform and the Changing Role of the State in Mexico: A Historical Perspective," in A.K. Dutt, K.S. Kim, and A. Singh (eds.), The State, Markets and_ Development, Edward Elgar., pp. 107-143. Shapiro, Helen and Lance Taylor. 1990. "The State and Industrial Strategy," World Development, Vol. 18, No.6, pp. 861-878. Amsden, Alice H. 1985. "The State and Economic Development in Taiwan," in P. Evans, D. Rueschemeyer, and T. Skocpol (eds.), Bringing the State Back In, Cambridge UP. WEEK 2: A. Why more Government?: "Market failure", "transaction cost" and "competitive asset" approaches. Arrow, Kenneth. 1985. "The Potentials and Limits of the Market in Resource Allocation," in George R. Feiwel (ed.), Issues in Contemporary Microeconomics and Welfare, SUNY UP. [ref] Stiglitz, Joseph E. 1989. "Markets, Market Failures, and Development," American Economic Review, Vol. 79, No. 2, pp. 197-203 (May). Itoh, Motoshige. 1991. ch 3: "Industrial Policy and Changing Industrial Structure;", pp. 31-39 ch. 4: "Theories of Infant Industry Protection: An (cont.) Overview;", pp. 40-49; ch. 5: "Industrial Setup Costs and Marshallian Externalities;", pp. 50-62; ch. 6 "Scale Economies and Information;" pp. 63-74; ch. 7: "Choice of Industrial Structure and Economic Welfare", pp.75-88, (exclude appendix), in Economic Analysis of Industrial Policy. Chang, Ha-Joon. 1994. ch. 3: "The Political Economy of Industrial Policy," in The Political Economy of Industrial Policy, St. Martin's Press, pp. 55-90. Amsden, Alice H.in process. "Learning-Based Theory of Catching Up", in The Rise of the Rest: Late Industrialization Outside The North Atlantic Region, ch 2, 74 pp. B. What is controversial?: Analytical issues, Bretton Woods conditionality. and Neoliberalism Special Section: "The World Bank's The East Asian Miracle: Economic Growth and Public Policy," Alice H. Amsden (ed.), World Development, 22, 4 (April 1994), pp. 615-670. Symposia: "The State and Economic Development," Journal of Economic Perspectives, 4, 3 (Summer 1990), pp. 3-74. WEEKS 3, 4, 5 and 6: Foreign trade, foreign investment, and industrial promotion A. Trade policy Baldwin, Robert E. 1977. "The Case Against Infant-Industry Tariff Protection," Journal of Political Economy. 77, 3 (June). [ref] Brander, James A. 1987. "Rationales for Strategic Trade and Industrial Policy," in Paul R. Krugman (ed.), Strategic Trade Policy and the New International Economics, MIT. [ref] Bhagwati, Jagdish N. 1985. ch 5 "Export Promotion as a Developmental Strategy," in Toshio Shishido and Ryuzo Sato (eds.), Economic Policy and Development: New Perspectives, Auburn House (Croon Helm), pp. 59- 67. Tybout, James. 1992. Linking Trade and Productivity: New Research Directions," World Bank Economic Review. Vol 6, No.2., pp. 189-210. Helleiner, G.K. 1994. "Introduction" in G.K. Helleiner (ed.), Trade Policy and Industrialization in Turbulent Times, Routledge., pp. 1-65 Sato, Kazuo. 1986. "Externalization of Domestic Macroeconomic Performance: Export-Led Growth or Growth-Led Export?" in Michele Schmiegelow (ed.), Japan's Response to Crisis in the World Economy, M.E. Sharpe., pp. 181-208. Fishlow, Albert. 1991. "Some Reflections on Comparative Latin American Economic Performance and Policy," in Tariq Banuri (ed.), Economic Liberalization: No Panacea: The Experiences of Latin America and Asia, Clarendon., pp.149-170. B. Foreign investment Fritsch, Winston and Gustavo H. B. Franco. 1992. "Foreign Direct Investment and Patterns of Industrialization and Trade in Developing Countries: The Brazilian Experience," in Gerald K. Helleiner (ed)., Trade Policy, Industrialization, and Development: New Perspectives, Clarendon., pp. 187-224. Shapiro, Helen. 1991. "Determinants of Firm Entry into the Brazilian Automobile Industry, 1956-68", Business History Review, 65, 4 (Winter). [ref] 1993. "Automobiles: From Import Substitution to Export Promotion in Brazil and Mexico" in David Yoffie (ed.), Beyond Free Trade: Firms, Governments and Global Competition. Harvard Business School Press., pp. 193-248. Paus, Eva. 1989. "Direct Foreign Investment and Economic Development in Latin America: Perspectives for the Future," Journal of Latin American Studies, No. 21., pp. 221-239. C. Industry Promotion Amsden, Alice H. and Ajit Singh. 1994. "The Optimal Degree of Competition and Dynamic Efficiency in Japan and Korea,"European Economic Review. 38., pp. 941-951. D. Industry Cases 1. Steel Baack, Bennett D. and Edward John Ray. 1973. "[American] Tariff Policy and Comparative Advantage in the Iron and Steel Industry" 1870-1929," Explorations in Economic History, 11,l (Fall). [ref] Sheahan, "Steel: Planning in Practice" in Sheahan (see Week 1) . Yonekura, Seiichiro. 1989. "The Long and Winding Road: The Postwar Japanese Iron and Steel Industry---Continuity and Discontinuity," Institute of Business Research, Hitotsubashi University., pp. 1-67. Howell, Thomas R., et. al. 1988. ch. 5: "The Developing Countries," in Steel and the State: Government Intervention and Steel's Structural Crisis, Westview., pp. 251-369. 2. Aerospace Samuels, Richard and David B. Friedman. 1992. How to Succeed Without Really Flying---The Japanese Aircraft Industry and Japan's Technology Ideology, MIT Japan Program, Ql80.J3.M22, No. 90.92-01. [ref] Baldwin, Richard. 1992. "High-Technology Exports and Strategic Trade Policy in Developing Countries: The Case of Brazilian Aircraft," in Helleiner, 1992 , pp. 225-253.(see above). McKendrick, David. 1991. "Obstacles to "Catch Up": The Case of the Indonesian Aircraft Industry," University of Texas at Dallas., pp. 1-39. Hill, Hal and Pang Eng Fong. 1988. "The State and Industrial Restructuring: A Comparison of the Aerospace Industry in Indonesia and Singapore," ASEAN Economic Bulletin, Vol. 5, No.2 (November), pp. 152-168. E. Country Cases: South Korea Stern, Joseph. 1990. "Industrial Targeting in Korea," Development Discussion Paper No. 343, Harvard Institute for International Development., pp. 1-61. Auty, R.M. 1991. "Creating Competitive Advantage: South Korean Steel and Petrochemicals," Tidschrift voor Economie en Sociologie Geografie, 82, No. 1., pp. 15-29. F. Country Cases: South Africa South African Chamber of Business. 1991. A Concept for the Development of A_ New Industrial Policy for South Africa, Johannesburg., pp. 1-63. Davis, Graham A. 1994. ch. 3: "History of Managed Trade in South Africa; pp 13-30; ch. 4: "A New Trade Policy: Out of the Pan and into the Fire", pp. 31-45; ch. 8: "A Search for Unexploited Comparative Advantage in South African H-O Manufactures;", 89-111, ch. 9: The Empty Economics in South Africa's Industrial Policy",pp. 111-123; in South African Managed Trade Policy: the Wasting of a Mineral Endowment, Praeger. WEEK 7: Regional planning, land and resource use. Timmer, C. Peter. 1991. "The role of the State in Agricultural Development," in C. Peter Timmer (ed.), Agriculture and the State: Growth, Employment, and Poverty in Developing Countries. Cornell UP. [ref] Limerick, Patricia Nelson. 1987. The Legacy of Conquest: The Unbroken Past of the American West, Norton. [ref] Pollard, Sidney. 1973. "Industrialization and the European Economy," Economic History Review, 2nd ser., 26, 4 (November). [ref] Nicol William and Douglas Yuill. 1982. "Regional Problems and Policy," in Andrea Boltho (ed.), The European Economy: Growth and Crisis, Oxford UP, pg. 411-443. Kraft, Evan. 1992. "Evaluating Regional Policy in Yugoslavia, 1966-1990," Comparative Economic Studies, No. 3, 4 (Fall-Winter), pp. 11-33. United Nations Industrial Development Organization. 1990. ch. IV: "Priority Areas For Industrial Development in the 1980s,", pp. 21-27, in Industrial Development in Thailand in the 1990s, UNIDO. Ranis, Gustav. 1990. "Asian and Latin American Experience: Lessons for Africa," Journal of International Development, 2. Amsden, Alice H. 1991. "Big Business and Urban Congestion in Taiwan: The Origins of Small Enterprise and Regionally Decentralized Industry (Respectively)", World Development, Vol. 19, No. 9., pp. 1121-1135. Lee, Jin Soon. 1994. "Korean Land Ownership and Use" in Lee-Jay Cho and Yoon Hyung Kim (eds.), Korea's Political Economy: An Institutional Approach, Westview, pp.361-465. Son, Jae-Young. 1994. "The 'Land Problem' in Korea," in Lee-Jay Cho and Yoon Hyung Kim (eds.) (see above). Hoffman, Michael L. and Struyk. 1994. "More Land at Lower Prices: The Deregulation Alternative," in Lee-Jay Cho and Yoon Hyung Kim (eds.) (see above). WEEK 8: Privatization and Ownership Frydman, Roman and Andrzej Rapaczynski. 1994. ch. 1: "Markets and Institutions in Large-Scale Privatization: an Approach to Economic and Social Transformation in Eastern Europe;" ch. 2: "Privatization and Corporate Governance: Can a Market Economy Be Designed?" in Privatization in Eastern Europe: Is the State Withering Away?, Central European UP, pp. 9-74. Amsden, Alice H., Jacek Kochanowicz and Lance Taylor. 1994. ch. 5: "Pseudo-Privatization and the World Bank"; ch. 6: "Enterprise and the State," in The Market Meets Its Match: Restructuring the Economies of Eastern Europe, Harvard UP, pp. 113-157. Jefferson, Gary H. and Thomas G. Rawski. 1994. "Enterprise Reform in Chinese Industry," Journal of Economic Perspectives, Vol. 8, No. 2 (Spring), pp. 47-70. Ramamurti, Ravi. 1987. Part II: India's Experience in Heavy Mechanical and Electrical Engineering (chs. 2, 3, and 4); and Part III: Brazil's Experience in Light Aircraft (ch 5) in State-Owned Enterprises in High Technoloay Industries: Studies in India and Brazil, Praeger, pp. 45-211. D. Himbara. 1994. "The Failed Africanization of Commerce and Industry in Kenya," World Development, 22, 3 (March). Singh, Ajit and Ha-Joon Chang. 1991. "Public Enterprises in Developing Countries and Economic Efficiency: A Critical Examination of Analytical, Empirical, and Policy Issues," Cambridge University. 85 pps. WEEK 9: Acquisition of Technological Capabilities Shishido, Toshio. 1985. "Japanese Technological Development," in Shishido and Sato (eds) (see WEEK 3, Part A)., pp. 199-313. Sato, Ryuzo. 1985. "Nothing New? An Historical Perspective on Japanese Technology Policy" in Shishido and Sato (eds) (see above). Lall, Sanjaya. 1993. "Technological Development, Technology Impacts and Industrial Strategy: A Review of the Issues," in Industry and Development, No.34, pp 1-36. Amsden, Alice H. 1989. ch. 11: "The World's Largest Shipbuilder;" ch. 12: "The Triumph of Steel" in Asia's Next Giant: South Korea and Late Industrialization, Oxford UP, 269-318. Lall, Sanjaya. 1992. "Technological Capabilities and the Role of Government in Developing Countries," Greek Economic Review, Vol. 14, No. 1, pp.1-36. Katz, Jorge M. and Nestor A. Bercovich. 1993. "National Systems of Innovation Supporting Technical Advance in Industry: The Case of Argentina," in Richard R. Nelson (ed.), National Innovation Systems, Oxford UP, pp. 451-475. WEEK 10: Policy Implementation A. State Autonomy Symposium: "State Autonomy and Business Influence" in Contention: Debates in Society Culture and Science (Spring 1994), pp. 115-182. [ref] Evans, Peter B. "Predatory, Developmental and Other Apparatuses: A Comparative Political Economy on the Third World State," Working Paper #11, Center for the Comparative Study of Development, Brown University. Hikino, Takashi and Alice H. Amsden. 1994. "Staying Behind, Stumbling Back, Sneaking Up, Soaring Ahead: Late Industrialization in Historical Perspective," in William J. Baumol, Richard R. Nelson, and Edward N. Wolff (eds.) (see above), pp. 287-315. Amsden, Alice H. 1992. "A Theory of Government Intervention in Late Industrialization," in Louis Putterman and Dietrich Rueschemeyer (eds.), State and: Market in Development: Synergy or Rivalry? Lynne Rienner, pp. 53-84. E. Bureaucracy Johnson, Chalmers. 1982. ch. 2: "The Economic Bureaucracy," in Johnson (see Week 1). Wade, Robert. 1990. ch. 7: "The Economic Bureaucracy," in Governing the Market: Economic Theory And the Role of Government in East Asian Industrialization. Princeton UP, pp. 196-227. Schneider, Ben Ross. 1991. Politics within the State:Elite Bureaucrats and Industrial Policy in Authoritarian Brazil. Pittsburgh UP. [ref] Chew, David C.E. 1992. Civil Service Pay in South Asia. ILO. [ref] Robinson, Derek. 1990. Civil Service Pay in Africa ILO.[ref] WEEK 11: Analyzing Policy Failures Gerschenkron, Alexander. 1977. An Economic Spurt That Failed: Four Lectures in Austrian History, Princeton UP. [ref]. Dietz, James. 1986. Economic History of Puerto Rico: Institutional Change and Capitalist Development. Princeton UP. [ref] Fitzgerald, E.V.K. 1976. The State and Economic Development: Peru since 1968. Cambridge UP. [ref] Loutfi, Martha. 1989. "Development Issues and State Policies in Sub-Saharan Africa," International Labour Review Vol.128, No. 2, pp.137-154. Lewis, P.M. 1994. "Economic Statism, Private Capital, and the Dilemmas of Accumulation in Nigeria," World Development Vol. 22, No. 3 (March). Lall, Sanjaya. 1992. "Structural Problems of African Industry," in F. Stewart, S. Lall, and S. Wangwe (eds.), Alternative Development Strategies for Sub-Saharan Africa Macmillan, pp. 103-144.. WEEK 12: New Research directions: Discussion

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